Real Estate (Taxes, Mortgage Interest, Points, Other Property Expenses)
Question: Is the mortgage interest and property tax on a second residence deductible?
The mortgage interest on a second home, which you do not rent out during the taxable year, is generally deductible if the interest satisfies the same requirements as interest deductible on a primary residence. If you rent out the residence, you must use it for more than 14 days or more than 10% of the number of days you rent it out, whichever is longer.
- The combined limitation for mortgage interest on your primary and secondary residence for a married couple filing a joint return, or an unmarried taxpayer is $1,000,000 for acquisition indebtedness and $100,000 for home equity indebtedness.
- Real estate taxes paid on your primary and second residence are generally deductible.
- Deductible real estate taxes include any state, local, or foreign taxes based on the value of the real property levied for the general public welfare.
- Deductible real estate taxes do not include taxes charged for local benefits and improvements that increase the value of the property, such as assessments for sidewalks, water mains, sewer lines, parking lots, and similar improvements.
- An itemized charge for services to specific property or people is not a tax, even if the charge is paid to the taxing authority. You cannot deduct the charge as a real estate tax if it is a unit fee for the delivery of a service (such as a $5 fee charged for every 1,000 gallons of water you use), a periodic charge for a residential service (such as a $20 per month or $240 annual fee charged for trash collection), or a flat fee charged for a single service provided by your local government (such as a $30 charge for mowing your lawn because it had grown higher than permitted under a local ordinance).
- Tax Topic 503 - Deductible Taxes
- Publication 530, Tax Information for Homeowners
- Publication 17, Your Federal Income Tax for Individuals
Category: Itemized Deductions, Standard Deduction
Subcategory: Real Estate (Taxes, Mortgage Interest, Points, Other Property Expenses)