 Limits
on writing off debt of 2 homes
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 Dear
Tax Talk,
We are buying a second home in Hawaii. We will now carry a $1.4
million mortgage based on our first home and second home combined.
We want to use the second home for personal use. Are there any tax
benefits, deductions?
-- Scott
 Dear
Scott,
Wouldn't you be more comfortable talking about this in person, in
Hawaii? I know I'd feel more comfortable.
The only tax benefit that a second home brings is
the allowance of a deduction for the interest paid on the mortgage.
You can always deduct real estate taxes on as many properties as
you own, be it your first or 10th. Maintenance and insurance are
never deductible on a personal residence. So, after all is said
and done, it's the mortgage interest deduction.
Unfortunately in your case that won't happen, even
if you take me to Hawaii.
You can deduct the mortgage interest on up to $1 million
in debt on a first and second home. You spent and borrowed too much,
and now you're over that limit. You can also deduct interest on
up to $100,000 more in mortgage debt, so you're only over by $300,000
in debt. This means that you'll be able to deduct roughly 11/14ths
of the interest you pay during the year. It gets a little more complex,
depending on when you took out the mortgages, but if you have that
much debt, you should get an accountant to figure out the details
or, alternatively, have me flown in.
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