Question:

Is there mortgage interest deduction on second home?

Answer:

Generally, both your first and your second home mortgage interest is deductible. Mortgage interest deduction applies when you have a first or second mortgage, a home equity loan or credit line taken against your home. However, there are certain rules and restrictions. For more specific guidelines about mortgage interest deduction on second home, it is good to talk to a tax advisor.

Second Home Mortgage Interest Deduction Facts To Know

A second home may be a house, a boat, a mobile home, and others - mainly, it has to have proper facilities. Also, different home sites may be used as a second home each year if they meet the qualifications for a second home. If you rent your second home, you must live there for a specified number of days to be eligible for mortgage interest deduction on second home.

Interest on loans not using your first or second home as security is not tax deductible. Third, fourth, etc. homes are not eligible for mortgage tax deduction.

The mortgage tax deduction is received by the borrower(s) who signed the mortgage agreement.

Mortgage interest deduction on your second home is limited by the combined amount of mortgages and/or equity loans existing on your property if those loans exceed either the market value of the second home, or $1,000,000.

Documents you will use to file for mortgage interest deduction purposes are as follows:

  • Form 1040 with Schedule A
  • Form 1098

IRS Publication 936 and Instructions for Schedule A are used for reference.

Once again, you should use professional tax advisor services for correct and timely processing of your properties' taxes and mortgage interest deduction.

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