The new house would only become your main home when you actually move in. For now, it is a second home. These are the tax consequences I can think of.
1. You are allowed to deduct mortgage interest on your main home and one second home. If you already have a different second home (making this your third home) then you will have to pick which of your second homes to deduct the mortgage interest for.
2. If and when you sell this new home, you are entitled to a $250,000 capital gains exclusion (or $500,000 if you are married filing jointly with your spouse) as long as you owned the home at least two years, and lived in it as your main home for at least two out of the past five years. Although the ownership clock on the exclusion started when you purchased the home, the clock will not start on using the home as your main residence until you actually begin to use the home as your main residence. This will only affect your capital gains tax if you need to sell this home less than two years from when you move in.
3. Any repairs that you make are not tax deductible and do not change your cost basis in the home. Any improvements that you make are not tax deductible but they add to your cost basis and may reduce your capital gains when you sell the home. A repair restores the property to as-was condition, while an improvement adds value to the property or extends its useful life of the home or its sub systems. For example, if a tree fell on the roof and punched a hole, and you repair the hole, that is a repair. If you find the entire roof needs to be replaced, that is an improvement, because you get a new life cycle for the new roof.
4. If you paid if you paid mortgage points to get a discounted interest rate, you generally have the option of deducting all of the points in the year you purchased the home, or spreading them out over the life of the loan. If you can’t deduct the mortgage in 2022 because this is not your main or the second home that you choose to deduct, then when you start deducting the mortgage interest in 2023, you will only be able to use the method of spreading the points out over the life of the mortgage.
