Mortgage interest and property taxes are deductible no matter what the classifification of the property is. However, there are limits.
Mortgage interest and property taxes for the period of time it was classified as rental property are claimed/deducted on the SCH E.
Mortgage interest and property taxes for the period of time it was classified as personal use (such as your primary residence or 2nd home) are claimed/deducted on SCH A. Take into consideration the limits for SCH A deductions though.
- Until the total of all deductions on your SCH A exceed your standard deduction, the SCH A deductions will have no impact what-so-ever on your tax liabiilty.
- For the property taxes (not the mortgage interest) there is a maximum of $10K that you can deduct for that. The $10K limit is referred to as the SALT limit (State and Local Taxes). So the maximum amount of all State and Local Taxes you can claim/deduct on SCH A is $10K.
Finally, take note that property insurance is only deductible for the period of time the property was classified as a rental. Insurance is not deductible for the period of time the property was not classified as a rental.
As a warning, when the program asks you for days of personal use, read the small print so you will understand why I am telling you that you will enter ZERO days of personal use.
