||Ask Dr. Don
Mortgage interest deductions
Dear Dr. Don,
If I own a home and still have a mortgage, can I buy another home
and write that interest off as well. I would like to move to a larger
house, but I would like to keep my first house as a rental property.
I am assuming that I would have to claim the rent as income, but
can I write both of my mortgages's interest off on my taxes?
With a rental property, there's no question that you can use the
mortgage interest deduction on your taxes. It's a business expense
and will reduce the net income from the rental income you receive
on the property.
If you're currently able to use the mortgage income
deduction on your current residence, you should continue to be able
to deduct the interest expense on your new home.
Even if you didn't rent out the home, it's likely
that you could use the interest deduction on both. IRS
Publication 936, Home Mortgage Interest Deduction, has all the
It's worth your while to consult with a professional
tax adviser to discuss what you can and can't deduct as business
expenses on the rental property. Consulting the tax professional
upfront could save a lot of headaches when you go to file your first
tax return after becoming a land baron.
-- Posted: Jan. 24, 2002