Second Home Mortgage Interest Deduction

You may also deduct interest payments on a second mortgage such as a home equity loan or line of credit but only if the debt was used to buy build or improve your main home or second home.

Second home mortgage interest deduction. If you rent out your second home you must also use it as a home during the year. However many people don t realize that the mortgage interest deduction can apply to second homes as well. Generally home mortgage interest is any interest you pay on a loan secured by your home main home or a second home. This limitation was introduced by the tax cuts and jobs act tcja and will revert to 1 million after 2025.

You can deduct home mortgage interest if all the following conditions are met. The irs considers a home to be any residential living space including houses apartments condos mobile homes and houseboats that has sleeping cooking and toilet facilities. You must use it more than 14 days or more than 10 of the total days it is rented out whichever is longer. You can deduct mortgage interest on a second home as an itemized deduction if it meets all the requirements for deducting mortgage interest.

The loan may be a mortgage to buy your home or a second mortgage. As long as they qualify you can write off mortgage interest on both your main home and a second home as long as each home secures the mortgage debt. Different rules apply to the mortgage deduction depending on whether a second home is a. You are precluded from deducting any interest on a loan you obtain to purchase or improve a second home unless the lender has a security interest in that home meaning.

Taxpayers can deduct the interest paid on mortgages secured by their primary residence and a second home if applicable for loans used to buy build or substantially improve the property. Currently the home mortgage interest deduction hmid allows itemizing homeowners to deduct mortgage interest paid on up to 750 000 worth of principal on either their first or second residence. The mortgage interest deduction is used to deduct the interest paid on a home loan in a given year.