I bought a house in June 16; son moved in to sell his old house and buy this one; finally sold old house in Jan 17. Is there a way to deduct taxes and interest?

[greer320]

I bought a house in June 16 so son could sell his current residence.  He moved in June 16, but was unable to sell old home until June 17.  He has not been able to get finances together to but this home yet.  Is there a way for me to deduct the interest, and real estate taxes on the house I bought?  I will rent it to him this year at a fair market value and sell it to him in the future.

[MargaretL · Accepted solution]

Yes, you can deduct your mortgage interest and real estate taxes as usual (or mortgage insurance and points if you paid any on the purchase)  since the son just moved in and you didn't charge him any rent (If i'm understanding your correctly..). At this point, it is your home; you still own it.  You can deduct above deductions for your primary and 2nd home in the Deductions & Credits section, Your Home category.

In 2017, if you rent it to him at FMV, the house will become your rental property, you would report rental income and your above expenses as rental expenses.  When you sell it to him, it will be reported as rental property sale on your tax return.