Ask Experts Questions for FREE Help !
Ask
    frazwood's Avatar
    frazwood Posts: 129, Reputation: 2
    Junior Member
     
    #1

    Jan 31, 2009, 12:48 PM
    Second home: Deducting mortgage interest, real estate taxes, and PMI?
    In March 2008, my wife and I purchased a second home as an investment (think of "Flip that House" except we haven't sold it yet and if it does sell... we'll lose money).

    When I originally started this process, I had read somewhere that I was not able to deduct the interest on the mortgage for this second house since it was not my primary residence.

    Fast forwarding to today, I am working on my Federal taxes. The instructions for Schedule A clearly state that I can deduct interest on both my first and second home. So, it seems as if I can deduct the mortgage interest, real estate taxes, and PMI that I paid on this second home in 2008.

    Please let me know if my logic is flawed... I'd rather not screw up my taxes.

    Thanks!
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
     
    #2

    Feb 2, 2009, 12:24 PM
    You CANNOT deduct the PMI if you claim the house as a second home, but you CAN claim the interest and real estate taxes.

    However, this is NOT a second home; it is an investment property.

    If you make the house a rental property, you can start deducting the PMI, mortgage interest and real estate taxes effective on the date you make the house available to rent. You SHOULD consider this as an option, because all of the people who are losing their homes to foreclosure WILL need somewhere to live.

    Until then, all of the costs you cite (PMI, mortgage interest and real estate taxes) are added to the basis to reduce your capital gain or increase your capital loss.

Not your question? Ask your question View similar questions

 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Deducting Mortgage Interest abroad in Islamic Finance? [ 1 Answers ]

I am presently living in Dubai where I am considering buying a house. I understand from some of the other blogs that so long as that house is my first home or second home, the loan is secured against the home, there is a true debtor creditor relationship, I'm legally legally liable for the...

Home Mortgage & Reasl Estate - Interest on Escrow [ 2 Answers ]

While paying Home Mortgage and Real Estate taxes to Financial Institutions, we are getting interest from the institution (interest on Escrow). Can you tell me actual concepts or meaning of interest on escrow and taxability? Thanks, Syed Thameem

Home in revocable trust and real estate taxes [ 1 Answers ]

We recently put our house in a revocable trust, per our lawyer advice, with the purpose of having the house passed to our children smooth and easy in case of our death, 2 days ago we received a letter from the county property appraisal office telling us that our application for homestead exemption...

Real estate interest deduction [ 1 Answers ]

Can I deduct real estate loan interest on investment property (raw land?)

Mortgage interest and real estate tax deduction for J-1 visa [ 1 Answers ]

Hi, I am in the US for 18 months, as an exchange professional. I plan to buy a condo or co-op in NYC and would like to know if I can deduct the interest on mortgage loan and the tax included in the monthly maintenance, from my taxed revenue? Thanks


View more questions Search