We recently moved and bought a house before we sold our previous home. These homes are our previous and present primary residences. Our previous home is on the market. We also own a second home. Can we deduct the interest and taxes on all three homes? Thanks.
2006-10-01 16:20:17 · 7 answers · asked by ginger 6 in Business & Finance ➔ Taxes ➔ United States
You can only deduct the interest on 2 houses at one time. Up to the point where you purchased the 3rd house, you can deduct the interest on the first 2. As soon as you purchased the 3rd, start counting only the interest paid on the 2 that are charging the most interest. As soon as you are back to 2 houses, you can resume deducting the interest on both of them. Remember, the maximum amount of loans all together that you can deduct interest from is $1,000,000. If your total acquisition debt is more than this, your deductions are limited to the first $1,000,000. Try borrowing more than normal on the 3rd house and use the extra to pay off the lowest mortgage so you can deduct more of the interest. Renting out a home you do not intend on keeping for very long is a VERY risky proposition. What if the renters trash it or refuse to move out when you finally find a buyer?
2006-10-04 16:25:41 · answer #1 · answered by TaxMan 5 · 0⤊ 0⤋
You can only deduct interest on your primary residence and a second home. Taxes can always be deducted.
See Publication 936 (Home Mortgage Interest Deduction) and Topics 503 (Deductible Taxes),504 (Home Mortgage Points), and 505 (Interest Expense) on the IRS website.
Tax & Real Estate Accountant
Hope this helps.
2006-10-01 17:02:06 · answer #2 · answered by Sweet Mystery of Life 3 · 0⤊ 0⤋
You can deduct interest and taxes on 2 homes at any given time. The old home no longer qualifies as your primary residence if you've purchased a new home and occupied it. If it will take a long time to sell the old him, you may benefit from temporarily renting it while trying to sell it, so you could use the interest & taxes to at least offset the income. This can only be a short term strategy. Feel free to contact me with additional questions via: http://www.slarson.com/contact or steve@slarson.com
Regards
Steve
2006-10-03 07:01:41 · answer #3 · answered by Anonymous · 0⤊ 0⤋
I would run this one by the IRS. If you sell your old home relatively quickly, it may not be a big issue, but since you are limited to one primary home and one second home, it may be that you cannot deduct the interest and taxes from one of the three houses for the overlapping period.
2006-10-01 16:41:22 · answer #4 · answered by just♪wondering 7 · 0⤊ 0⤋
You can only have one as primary resident and one second home, all others will be investment properties.
The tax treatment for each type of property is different.
I don't think you can successfully argue which one is your primary resident other than the one you are currently living. But the other two you might be able to decide which one is second home and which one is an investment.
Taxation rules for investment and second home are quiet complex, it will depends on your AGI, your loan on primary resident, points you paid for loans, your previous tax treatment on points etc. I would suggest that you gather all the loan documents and speak with an accountant.
Best wishes.
2006-10-02 09:08:25 · answer #5 · answered by JQT 6 · 0⤊ 0⤋
IRS Publication 936:
More than one second home. If you have more than one second home, you can treat only one as the qualified second home during any year. However, you can change the home you treat as a second home during the year in the following situations.
* If you get a new home during the year, you can choose to treat the new home as your second home as of the day you buy it.
* If your main home no longer qualifies as your main home, you can choose to treat it as your second home as of the day you stop using it as your main home.
* If your second home is sold during the year or becomes your main home, you can choose a new second home as of the day you sell the old one or begin using it as your main home.
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It is possible that the interest on the home you are selling may be treated as investment intere; consult a tax advisor for complete guidance.
2006-10-01 17:03:13 · answer #6 · answered by TaxGuru 4 · 1⤊ 0⤋
Try to rent ith house out and use it as rental loss if it do not rent and that will offset any income.
2006-10-02 01:49:05 · answer #7 · answered by Kenshin 5 · 0⤊ 0⤋
Depends on how long you've owned them
2006-10-01 16:24:34 · answer #8 · answered by bassmechanic27 1 · 0⤊ 2⤋