Investment interest

[Bonnie]

Taxpayer bought 2 pieces of real estate in 2006. One property has a house that was never rented but was bought to resale. House was sold in Jan 2007. Can the interest paid in 2006 be claimed as investment interest? What about the real estate taxes paid on house in 2006? Any where to claim that?

Also second property has a house that he began renting in Jan 2007 so no Sch E for 2006. Can the interest for 2006 be investment interest? There was also real estate taxes paid in 06 on this property?

Thanks for any help

Bonnie

[Snaggletooth]

Mixed Results

Bonnie, for the first house (investment only):

Interest deductible as investment interest Form 4952.
Taxes deductible as Schedule A taxes.

For the second house, I might receive a lot of disagreement from my cohorts, but I would file a Schedule E showing no revenue as long as the house was available to rent during the latter part of the year. And I would deduct taxes, interest, and all the customary expenses on Schedule E. This is somewhat unorthodox, but I do this under the right circumstances. If the property brings no rent for two years consecutively, then I draw the line.

[Kram BergGold]

If Not Available For Rent

Then I would treat the same way as house 1.