Deduct points on a 2nd primary home

Forum|Forum|3 years ago
March 20, 2023
4 replies
36 views

My wife moved out of state for her job and bought a home there. We now have two primary homes we both live in but in different states. Is her home considered a 2nd home and therefore we have to amortize the points paid, or can we deduct the full points paid this year? If the latter, how do we do that?

SharonD007

Level 14

Married couples cannot designate two homes as their main home, one is considered a second home. Taxpayer’s (including married couples) can only have one primary residence. There are certain factors to determine how to designate which home is your main home (where you get your mail, the address on your drivers’ licenses and the address listed on your tax return). You can designate either home as your primary residence as a married couple.

Please review the TurboTax Help article Video: Can We File Two Primary Residences if Filing a Joint Tax Return? for additional information.

You can still take deductions even if you designate the home your spouse purchased as a second home. The interest is limited based on the debt secured by your first and second home and the deduction for property taxes in limited to $10,000. You are correct that you will have to amortize the points if you designate the home that your spouse purchased as your second home. Please see IRS Topic # 504 Home Mortgage Points and TurboTax article Buying a Second Home—Tax Tips for Homeowners for additional information.

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tinzanaAuthor

Level 2

Since my wife works in New Jersey, her drivers license are registered to her house in NJ and she gets all her mail there. Would it be more beneficial for us to file married separately? It seems from the rules both houses can be considered primary as we are currently living separately.

MarilynG

Level 15

Unless the deductible points claimed on her Itemized Deductions exceeds the $12,950 deduction she would lose by filing separately, it probably is not a good idea to do so (which is usually the case).

You could calculate both ways to compare.

Here's more info on Filing Jointly or Separately.

@tinzana

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Mike9241

Level 15

but be wary of which you claim as primary because the other is not so if you were to sell the "second" you would probably not be eligible for the home sale exclusion even if you meet the occupancy and ownership requirements.

Mike9241