Second home mortgage interest

[richperkins]

I purchased a new primary residence at the end of 2015, but had not yet sold my old primary home (it was on the market, but not yet sold).  In May of 2016, I finally sold my old primary residence.  So that means I was pay two mortgages (and prop taxes) on two different homes Jan-May.  Would I be able to deduct the 2016 (Jan-May) mortgage interest and property tax on my old home as a second home?

[DS30 · Accepted solution]

Yes, you can deduct all interest and property taxes paid during the 2016 calendar year as an itemized deduction. Once you changed your main residence to a new home, your old home would be considered your second home.

You will also be able to take the gain exclusion as long as you considered the home your "primary residence" for 2 of the last 5 years.  You could live in it for two years and then rent it for three years (or it was vacant for 3 years) and then sell it (so long as it is sold within the five year mark from when you first lived in it as your primary residence). If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income. You may qualify to exclude up to $500,000 of that gain if you file a joint return with your spouse  

See  Sale of Your Home for more information on the exclusion

To enter these transactions in TurboTax, log into your tax return (for TurboTax Online sign-in, click Here and click on "Take me to my return")

To enter your Property Taxes in TurboTax Online or Desktop, please follow these steps:

1. Once you are in your tax return, click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
2. Next click on “Deductions and Credits”
3. Next click on "jump to full list" or “I’ll choose what I work on”
4. Scroll down the screen until to come to the section “Your Home”
5. Choose "show more", then Property Taxes and follow the onscreen instructions
6. Enter under "Other Property"

To enter your Mortgage Interest in TurboTax Online or Desktop, please follow these steps:

1. Once you are in your tax return, click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
2. Next click on “Deductions and Credits”
3. Next click on "jump to full list" or “I’ll choose what I work on”
4. Scroll down the screen until to come to the section “Your Home”
5. Choose "show more", then Mortgage Interest and Refinancing and follow the onscreen instructions. You can select "add a lender" and Mortgage lender's name and interest income.

[richperkins]

So just to clarify, are you also stating the IRS tax rules allow this to qualify as a second home, or are these just instructions on how to do it?  I know how to enter this information in TurboTax, I'm just concerned that this particular situation doesn't qualify as a second home.

[DS30]

Yes, it can qualify as a second home after your changed your residence to your new home. Also you will still be able to claim the home gain exclusion on the sale as long as you considered the home your "primary residence" for 2 of the last 5 years.