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Posted by Paul Thomas, CPA on April 16, 2006, 2:10 am
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> A second home was purchased from a related person at fair
> market in 2005. In Nov 2005, steps were taken to sell the
> second home, such as signing a listing contract with a real
> estate agent. The home was not rented during 2005. The
> home is currently unsold, but listed for sale.
>
> Is the home a qualified second home for purposes of
> deducting interest and property taxes in 2005? The question
> relates to IRS Pub 936 which contains the following:
>
> "Second home not rented out. If you have a second home that
> you do not hold out for rent or resale to others at any time
> during the year, you can treat it as a qualified home. You
> do not have to use the home during the year."
>
> Does signing a listing contract result in "hold out for ...
> resale to others"? Does having 15 or more personal use days
> change anything?
There is no intent for a second home to be denied the
mortgage interest or property tax deduction solely because
that property was put on the market. That second home could
easily be a former residence or a vacation home. It is
intended to not allow a deduction on Schedule A for
"investment" property, purchased with the intent to flip it
by someone in the "business" of doing so, one house at a
time.
So yes, personal use is of some import, as are specific
facts and circumstances.
--
Paul Thomas, CPA
paulthomascpapc@bellsouth.net
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