Mortgage interest & taxes

Forum|Forum|6 years ago
October 11, 2019
5 replies
36 views

Dilemma: Primary home with mortgage interest & taxes, Secondary home with taxes, live aboard boat with mortgage interest and vacation ownership with mortgage interest. . . Was is deductible?

xmasbaby0

Level 15

You can deduct mortgage interest from two homes. Not all three. Pick two.

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CathydcAuthor

Level 2

Which brings me to second question. . Taxes on both homes can be deducted? But I would end up using interest from secondary home vacation resort ownership. Is there any issue with that?

CathydcAuthor

Level 2

Vacation resort is titled as timeshare ownership.

JimIah

Level 2

Boat Criteria

The IRS has an expansive definition of "home" for the purposes of the mortgage interest deduction. As long as the boat has sleeping, cooking and toilet facilities, then the IRS treats the boat as a second home, according to IRS Publication 936. If it's missing one of these elements, you can't treat it as a home, even if you make do with what it has. For example, if it doesn't have cooking facilities, you can't treat it as home for tax purposes, even if you just bring along enough food that doesn't require cooking.

Second Home Requirements

If you don't rent out the boat at all, you don't have to satisfy the personal use requirements. However, if you use your boat as a business, even renting it out for just one day, this triggers the use requirements. If you rent it out, you must use it for the longer of 14 days or 10 percent of the number of days you rent it out. For example, if you rent it out for a week, you have to use it for at least 14 days during the year for it to qualify. Alternatively, if you rent it out for 160 days, you have to use it for at least 16 days to qualify.

JimIah

Level 2

A second home has some specific rules associated with it in order for the potential owner to obtain financing, though. For example, timeshares are not considered second homes. Also, you have to actually use the second home some time during the year. That requires that you be able to actually get to the second home.