Mortgage interest on second home deductible?
Client has a home in India and his in-laws are living in it. Is he able to deduct the mortgage interest? I suspect that the IRS will look at the home as a rental instead of a second
home??
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01/22/09 3:02pm PST
Viewed by asker 03/18/09 4:46pm PDT
Viewed by asker 03/18/09 4:46pm PDT
2 Replies
01/22/09 3:52pm PST
if the in-laws are paying rent ,he would report the income on 1040 line 21 ,and deduct any prop taxes or mortgage interest on schuedule A.when you rent to relatives,below fair market value,it is assumed you are engaged in an activity not for profit,since you could create an abusive tax shelter.there is so many variables you should read the irs publication on rental income and expenses.
Mt Juliet CPA
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01/22/09 4:41pm PST
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You need to pay extremely close attention to what sally tax told you. Make sure its not below FAIR MARKET VALE LIKE SHE SAID. Ak\lso they are going to look very seriously at a sechomd home rented out in India
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