Tax Experts
Allowable Tax Deductions on Multiple Homes
By Kevin McCormally, Editorial Director, Kiplinger.com
March 18, 2008
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Q: My main residence in New Hampshire is fully paid for. I own a vacation house in Florida and recently bought another in New Hampshire, about 75 miles from my residence. Can I deduct state taxes I paid on the three houses and the mortgage interest from the two vacation homes?
If not, can I rent out the Florida house -- even though the rent would not come close to paying expenses? -- Tom B.
Kevin's Answer:
You can deduct property taxes on any number of residences.
But there's a limit on the number of personal residences on which you can deduct mortgage interest.
You may deduct interest on up to $1 million of "acquisition indebtedness" (that is, money borrowed to buy or improve) your main home and a second home. Your main home is where you live most of the time, so I assume that's the home you've paid off. You can choose which of the vacation homes to treat as your second home.
The fact that your main residence is paid off does NOT let you treat both vacation homes as deductible residences. You don't get to write off interest on two homes, you get to write off interest on your main home and one other.
Now, if you rent out one of the vacation homes so it qualifies as a rental property rather than a personal property, the mortgage interest would be deductible as a rental expense.
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