Article Score0

I bought my 1st house in 04/1998, and lived in it until I sold it in 02/2002. I had been getting mortgage interest dedcutins on it.
I bought my 2nd house in 03/2002 and had been living in it until now. I had been getting mortgage interest dedcutions on it also.
I am now considering “selling” my current home and moving to a larger home, which will be my 3rd house. My friend tells me that I wont be able to deduct my mortgage interest on my the 3rd home I am planning to buy after selling the second house.
Reason: My friend tells me I am not a first time homebuyer. He says only first and second houses get mortgage deduction benefit. if you want to deduct mortgage of your 3rd home you will have to sell your 2nd house and live in a rental for two years to qualify.
Above reasoning looks quite odd to me. I had not been owning multiple houses at the same time. I had only been upgrading as I can afford. what are the rules? and what are my possible options.

4 Thoughts on Is mortgage interest deductible for my 3rd home?
  1. Reply
    August 5, 2011 at 2:18 am


  2. Reply
    August 5, 2011 at 2:21 am

    Two things.
    One you have to ask yourself, tax deduction on your mortgage payments or the tax waiver for profits after you sell a home?

    In some states profits from the the sales of your home can be waived of taxes up to a certain amount if you live there long enough. This has nothing to do with tax deduction.
    Any home where you pay a mortgage the interest is tax deductible.
    Secondly first time home buyers doesn’t really matter in most cases, rates and rules usallly applies in relationship to primary residences, second homes, or investment homes.

    Best suggestion is to talk to your local accountant in terms of taxation for the sales of your home, in some states a timely sales and repurchase of another home can prevent you from having to pay taxes for the sales of your home.
    Even ask a realtor, they will know which is the best idea.
    Congratz on your new home
    Always check out rates to make sure you are getting the best deal. BofA is currently offering some great prices for mortgages, check them out first. =o)

  3. Reply
    August 5, 2011 at 2:22 am

    yes its a deduction.

  4. Reply
    Miss M
    August 5, 2011 at 3:06 am

    Mortgage Interest is deductible regardless of it being your 1st or 10th home. There are some programs out there for first time home buyers that limit you to not having owned a home for several years, and that may be what your friend was thinking of.
    When you file taxes, bring the HUD Settlement statement for any mtg transactions for that year (purchase or refi) and the tax professional may be able to find additional deductions. The HUD is the statement that lists all the fees of that transaction (points, atty fees, etc)
    Good Luck!

    Leave a reply

    Register New Account
    Reset Password