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.