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Paying off your mortgage is not anything you enter on your tax return. If you paid any interest on that mortage during the tax year==before you paid if off -- then you can enter that interest on your tax return. And if you now have a second home with a mortgage, yes, you can enter that mortgage interest on the return.
This will only affect your tax due or refund if you have enough itemized deductions to exceed your standard deduction, of course.
STANDARD DEDUCTION
Many taxpayers are surprised this year because their itemized deductions are not having the same effect as they did on past tax returns. The new higher standard deduction and the elimination of certain deductions, as well as the cap on state and local taxes have had a major impact.
Your itemized deductions have to be more than your standard deduction before you will see a change in your tax owed or tax refund. The deductions you enter do not necessarily count “dollar for dollar;” many of them are subject to meeting tough thresholds—medical expenses, for example, must meet a threshold that is pretty hard to reach. The software program uses all the IRS rules that apply to the expenses you enter, and it tells you if you have enough to use your itemized deductions or if using the standard deduction is more advantageous for you. Under the new tax laws, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes.
Your standard deduction lowers your taxable income. It is not a refund
2018 Standard Deductions:
Single $12,000 (+ $1600 65 or older)
Married Filing Separately $12,000 (+ $1300 65 or older)
Married Filing Jointly $24,000 (+ $1300 each spouse 65 or older)
Head of Household $18,000 (+ $1600 65 or older)
Look at line 8 of your Form 1040 to see your standard or itemized deductions.
2019 Standard Deduction Amounts
Single $12,200 (+ $1650 65 or older)
Married Filing Separately $12,200 (+ $1650 if 65 or older)
Married Filing Jointly $24,400 (+ $1300 for each spouse 65 or older)
Head of Household $18,350 (+ $1650 for 65 or older)
Oh--and about calling the house your "principal residence?" That comes into play if you sell the house; when you sell it, you have to say if it was your own principal residence for 2 of 5 years before the sale, so that you can take the exclusion for capital gains.
You do not have to say anything now about which of your two homes is your principal residence.
<<Can I deduct the interest on my second house? Do I have to declare a house as the principal residence?>>
Yes, you can deduct the mortgage interest that you pay on a second home.
No, you don't have to declare it as your principal residence in order to deduct the mortgage interest.
https://www.irs.gov/publications/p936#en_US_2018_publink1000229900
If either of the homes you now own were used by you to produce rental income in 2018 or 2019 please let me know. I have "tons" of information that will help you get things right for your first year of reporting rental income. When dealing with rental property, absolute perfection in the first year is not an option - it's an *absolute* *must*.
Hi Carl
Thanks for responding.
No rental income now or in future. We plan to retire at the second home and sell our current home in 2020.
Not sure when we should officially change our address to second home (e.g., drivers license) since we are living in both right now.
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