|
These tax tips are taken from the IRS website. Keep them in mind when you prepare your returns this year. Visit rentalproperty.com to see the latest real estate investment news, analyze the top properties and assemble a team to help you execute your investment strategy.
Is the mortgage interest and property tax on a second residence deductible?
The mortgage interest on a second home which you use as a residence for some portion of the taxable year, is generally deductible if the interest satisfies the same requirements for deductibility as interest on a primary residence. Real estate taxes paid on your primary and second residence are, generally, deductible. Deductible real estate taxes include any state, local, or foreign taxes on real property levied for the general public welfare. Deductible real estate taxes do not include taxes charged for local benefits and improvements that increase the value of the property. For more information, refer to Publication 17, Your Federal Income Tax for Individuals; chapter 24 Tax Topic 503, Deductible Taxes; and Publication 530, Tax Information for First-Time Home Owners.
References:
Publication 936, Home Mortgage Interest Deduction
Publication 530, Tax Information for First-Time Homeowners
Publication 17, Your Federal Income Tax for Individuals
Tax Topic 503, Deductible Taxes
Tax Topic 505, Interest Expense
|
|
I have a mortgage for my primary residence and a second mortgage for land that I intend to build a home on. Can the interest be deducted for the second mortgage?
Unless you have begun construction of a home on the bare land that you can occupy within 24 months, the land would be considered an investment and the interest you paid on the second mortgage would not qualify as deductible mortgage interest. However, it would constitute investment interest if you itemize your deductions. For more information, refer to Publication 550, Investment Income and Expenses, chapter 3 and Publication 936, Home Mortgage Interest Deduction.
References:
Publication 936, Home Mortgage Interest Deduction
Publication 550, Investment Income and Expenses
Tax Topic 505, Interest expense
Is interest on a home equity line of credit deductible as a second mortgage?
You may deduct home equity debt interest, as an itemized deduction, if you are legally liable to pay the interest, pay the interest in the tax year, secure the debt with your home, and do not exceed certain limitations. For more information, refer to Publication 936, Home Mortgage Interest Deduction; and Tax Topic 505, Interest Expense.
References:
Publication 936, Home Mortgage Interest Deduction
Tax Topic 505, Interest Expense
refinanced my home last year and paid points. Are they all deductible this year?
Generally points paid to refinance your home are not deductible in their entirety in the year paid. They are "amortized" or deducted over the life of the loan. For more information, refer to Publication 936, Home Mortgage Interest Deduction, and Tax Topic 504, Home Mortgage Points.
References:
Publication 936, Home Mortgage Interest Deduction
Tax Topic 504, Home Mortgage Points
|
