Florida is One of the Most Tax-Friendly States

You Can Deduct Mortgage Interest on Your Vacation Home

  • April 4, 2018

You Can Deduct Mortgage Interest on Your Vacation Home

If you own, or are considering the purchase of a second home, as long as you’re not renting it out for extended periods, you might be able to write off all the mortgage interest.

If you don’t rent out a second home for more than 14 days each year, you can deduct the mortgage interest you pay on it. But your deduction is capped at the interest you’d pay on up to $1 million of debt on both your first and second homes combined. Additionally, you can deduct property taxes on your first and second home. You can only make these deductions if you itemize.

As long as you don’t lease it out for more than two weeks a year, any rental income you receive will also be tax-free, too.

If renting the second house for longer than the 14 day limit, you’ll have to report the rental income to the IRS. But you can still deduct some of the mortgage interest and rental expenses, such as insurance and utilities, for the portion of the time that you rent out the house. Be aware: calculating the deduction gets complicated because you’ll have to determine how much of those costs should be allocated to the period when you were leasing out the house and when you were personally using it.

Check out IRS Publication 530, Tax Information for Homeowners, for more information about deducting mortgage interest on second homes and the rules for deducting rental expenses.

Here at TaxProblemSolver.com, we’re available to help you make the most of your second home, from a tax perspective. If you have any questions, email me at larry@taxproblemsolver.com and I, or one of my Tax Problem Solver Team, will help you with whatever’s going on. Let’s make taxes work for us rather than the other way around!

About the Author Larry Heinkel J.D. LL.M

Larry Heinkel is a tax and bankruptcy attorney with more than 38 years experience helping businesses and individuals, solve their state and federal tax problems. Mr. Heinkel has been extremely successful in representing his clients before IRS and DOR, and is known throughout Florida as an expert in tax problem resolution.

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