Client has a 3rd home with a mortgage. They use the property about 10 days a year and it is not rented. Can this interest be considered investment interest and used to offset investment income?
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Sounds like a vacation home
Sounds like a vacation home, but you can ask them what their main purpose in owning the property is and whether they are managing it like an investment. You also need to determine what the loan proceeds were used for. -
The 14 day rule applies to whether or not property falls under the vacation home rules of Section 280A. Vacation home rules only deal with disallowing deducting net losses, and whether you can exclude rental income if rented less than 14 days during the year.
Your question deals with whether the unit qualifies as investment property or personal use property. Since it is used 10 days out of the year for personal use, it is personal use property. There is no 14 days or less exception to the rule for being able to deduct investment interest expense. It is personal use property, so no investment interest expense deduction is allowed.Last edited by Bees Knees; 07-21-2006, 01:52 PM.Comment
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