investment property

[MissSue1]

I bought a second home and it had to be an investment property as I have a principle residence. My daughter just lived there for 3 years-didn't pay  rent. Can I deduct mortgage interest and property taxes as we sold it this year. It was a foreclosure so had lots of repairs before she could move in, assume those can be deducted.  THANKS SO MUCH!

[AmyC]

When you add the sale of this house under Investment Income, you will calculate the basis using those repairs and closing costs.

Your basis in the house will be what you paid originally plus deductible closing costs PLUS what you spent improving the property PLUS deductible closing expenses.

The IRS is not concerned with financing or paid cash for a second home.

When you purchased the house and sold it, these closing costs are added to your basis:

• Attorney fees in connection with obtaining property

• Commissions

• State stamp taxes and transfer taxes

• Tax service fees

• Title policy fees or title insurance

• Miscellaneous abstracts of title, surveys, recording of deed

For complete details on the basis of assets, please see IRS pub 551.

To navigate the entry:

1. In the program, under Stocks, Mutual Funds, Bonds and Other, select Start/ Review/Edit/Revisit.
2. Did you sell... select YES
3. Did you receive a 1099-B.. select NO
4. Tell us about the sale... enter sale of second home, address, whatever you like.
5. Now we'll walk you through entering your sale details. Drop down box, select second home.
6. Date sold
7. Date purchased
8. Proceeds - this should match your 1099S
9. Cost or other basis -This requires math and closing paperwork from buying and selling the house. along with all the receipts for improvements you made

[MissSue1 · Accepted solution]

Great news on the closing costs and repairs.....so the (accumulated)  mortgage interest and property taxes  are not deductible?