|
Posted by A.G. Kalman on July 1, 2006, 4:37 pm
Please log in for more thread options
PJ O'Donovan wrote:
> Need some advice.
>
> My wife and I recently purchased a summer residence and have
> kept our primary residence as our winter home.
>
> We have a $75000 mortgage on our primary residence which has
> been appraised at $350,000. We bought the summer residence
> last week for $300,000 and secured a mortgage of $150,000.
> I understand mortgage interest on both the primary residence
> and the summer residence are fully deductible for FIT and
> neither would be alternative minimum tax items.
>
> The owner of the adjacent unimproved lot to our summer
> residence has offered his lot to us for $65000 and has
> offered owner financing on a 5 year balloon for $55000.
>
> My question is: Will the interest on the mortgage on the
> contiguous lot be deductible as well even though a different
> lender is involved?. In other words would the IRS consider
> both the summer residence and the contiguous lot as one
> residence although not the primary residence?
>
> I would be most appreciative of a response.
Different lenders has no bearing on the whether your
interest expense is deductible. What does matter is whether
the loan is secured by the land and your intention for the
land. If your intention is to treat the land as nothing
more than an improvement to your summer home, then the
interest payments on the note would be qualified mortgage
interest as long as the land or your home is the security
for the note. If you intend to build a third home on that
lot or a spec home on that lot or the loan is not secured by
either the land or your home, then the interest expense is
not qualified mortgage interest.
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
| 
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap