mortgage interest on second home lowers tax refund

[sonofrino]

I have seen several posts regarding this issue.  If entering the mortgage interest on the second home lowers my tax refund by several thousand dollars, is it permissiable to not include the mortgage interest for the second home?

[Mike9241]

that could depend on several factors. would the mortgage balance on the second home push you over the mortgage balance cap. also, the additional interest may push you into AMT. 

there was a court case decades ago where taxpayers to avoid AMT understated their deduction for real estate taxes. The tax court said they could do it. That was an old case and whether it is still law is unknown.  

another possibility is incorrect data entry. this forum has no access to your return or documents. 

[zomboo]

Although you do have to enter the 1098s for both your main and second home, it is permissible to not include the mortgage interest for the second home as part of your qualified residence interest by selecting the 'this loan is not secured by my home' option. If your second home is used for business or as a rental, you can still deduct business or rental interest expenses. Be aware that once you choose to treat your second home as not secured, you can't easily go back. It remains in affect for the years going forward.

The mortgage deduction is limited to $750K for this year and next year but is scheduled to go back to $1.1M in 2026 which means your deduction will be greater in the years after 2025. Or course, who knows what changes to the tax regulations will take place between now and then.