t/p owned a home since 1997 to 11/04 which was primary residence. Still owns and is vacant, so treating as 2nd home, not a rental. In 11/04 purchased another home which t/p is occupying as primary residence. Purchase price $1,050,000 mortgage $800,000 on purchase, now $790,000 as of 121/05. Took out equity line on 1st primary residence for 173,000 used for landscaping, improvements on the 2nd home, now primary residence. T/p also took out mortgage on 1st primary residence of $290,000 (I think this was used for down payment on the 2nd -now primary residence).
Oh this is confusing!
So my question, I am limited to $1 mil on primary acquistion debt. So have $790,000 plus improvements of $173,000 which is $963,000 all on the 2nd purchase which is now primary residence. So can I take mortgage interest deduction on the first primary residence (which is now 2nd home) for the balance of 137,000.
Taxpayers do not know how complicated this is trying to trace the money and calculate what is deductible mortgage interest and what is not.
Thoughts!
Sandy
Oh this is confusing!
So my question, I am limited to $1 mil on primary acquistion debt. So have $790,000 plus improvements of $173,000 which is $963,000 all on the 2nd purchase which is now primary residence. So can I take mortgage interest deduction on the first primary residence (which is now 2nd home) for the balance of 137,000.
Taxpayers do not know how complicated this is trying to trace the money and calculate what is deductible mortgage interest and what is not.
Thoughts!
Sandy
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