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Victor
Does interest payments for my second house’s mortgage count for tax credit?
Hi, I heard, the mortgage interest for your second property doen’t get any tax credit at all?
My situation is this; during the early Nevada boom, I’ve purchased a small condo over there. The mortagage payments for it has saved me quite some taxes for the past two years. Now, I’m considering purchasing a condo in the South Bay area (I’m a California resident) for myself to reside in; if i were to purchase my second property in california, for which I’ll personally reside in, will it’s interest payments be tax deductible?
Thanks
Oh, my Vegas house is being used as a rental property now.
...asked January 27th, 2012 @ 6:00 pm
in Loan - Home
40455momzadork
0 
0Yes, you can take mortage interest for both.
...answered January 27, 2012 @ 6:11 pm
40456Vegan
0 0You can take the deduction on a “second home”
But you need to live there for 14 days or 10% of the number of days you rented it out.
If it is a rental, you can deduct the interest property taxes and depreciation as a rental expense and use the loss (if you have one) to offset your income.
I own a 2 unit apartment and live in one of the units. I am able to earn rental income tax free due to depreciation.
...answered January 27, 2012 @ 6:28 pm
40457JQT
0 0In general mortgage interest for 1st and 2nd homes are deductable. However, may subject to limitation if you have equity line(s). See IRS Publication 17:
Fully deductible interest. If all of your mortgages fit into one or more of the following three categories at all times during the year, you can deduct all of the interest on those mortgages. (If any one mortgage fits into more than one category, add the debt that fits in each category to your other debt in the same category.)
The three categories are:
Mortgages you took out on or before October 13, 1987 (called grandfathered debt).
Mortgages you took out after October 13, 1987, to buy, build, or improve your home (called home acquisition debt), but only if throughout 2006 these mortgages plus any grandfathered debt totaled $ 1 million or less ($ 500,000 or less if married filing separately).
Mortgages you took out after October 13, 1987, other than to buy, build, or improve your home (called home equity debt), but only if throughout 2006 these mortgages totaled $ 100,000 or less ($ 50,000 or less if married filing separately) and totaled no more than the fair market value of your home reduced by (1) and (2).
The dollar limits for the second and third categories apply to the combined mortgages on your main home and second home.
For more detail consult IRS publication 17:
http://www.irs.gov/publications/p17/ch23.html#d0e51740
If the NV home is 100% rental property, then it is not considered as your 1st (or 2nd) home. The interest is deducted on Schedule E rather than Schedule A.
Best wishes.
...answered January 27, 2012 @ 6:59 pm
40458Judy
0 0Rental property has totally different rules than a second (vacation) home. The interest payments would show on your schedule E with your rental income.
...answered January 27, 2012 @ 7:22 pm