Mortgage Interest

[S T]

Not having really had this issue presented before, question on Mortgage Interest Deduction.

T/P will be acquiring a New Personal Residence - Loan will be $ 1.5 million - so they will be limited to mortgage interest based on the $ 1 million, correct?

They also have a 2nd home that we have been deducting that interest - Question is what happens to the 2nd home Interest - will it still be deductible or does the taxpayer lose the deduction of mortgage interest on the second home, since the primary is at
$ 1million?

Thanks,

Sandy

[Gene V]

Not having really had this issue presented before, question on Mortgage Interest Deduction.

T/P will be acquiring a New Personal Residence - Loan will be $ 1.5 million - so they will be limited to mortgage interest based on the $ 1 million, correct?

They also have a 2nd home that we have been deducting that interest - Question is what happens to the 2nd home Interest - will it still be deductible or does the taxpayer lose the deduction of mortgage interest on the second home, since the primary is at
$ 1million?

Thanks,

Sandy

Sandy,
I don't know much about this, however from Pub. 936; the dollar limits apply to the
combined mortgages on the main home and second home. page 2

[Burke]

I agree with this.

[Lion]

$1.1 million

You can deduct a maximum on $1.1 million of principal which can include up to two homes, and home equity not used to buy, build, or renovate a home cannot be more than $100,000 of that $1.1 million.

[joanmcq]

Yup, agree with Sandy et al. However, if the second home has a higher interest rate, you can use that one, and then deduct the new house up to the 1.1 million.

And you can switch the houses around, just can't go over the 1.1 million of accquisition debt, or 1.million accquisition + 100K equity.