Can You Deduct Property Taxes on a Second Home?

It is the end of the tax year and you want to know the answer to the question, ‘Can you deduct property taxes on a second home?’ In most cases, the answer will be yes. A lot of people look for all the deductions they can find when it is time to file their personal income tax return at the close of the tax year. They want to reduce the amount of taxes that they are required to pay by lowering their adjustable gross income or by taking allowable deductions from the tax that is due. If you file the Internal Revenue Service (IRS) Form 1040 you can also use Schedule A to list itemized deductions. You will need to find out what the standard deduction is for your filing status because your total allowable deductions must be greater than this amount in order to itemize.

You can deduct property taxes on a second home if it meets the criteria the IRS has published. If so, then it is considered a qualifying property or qualifying home. If you want to itemize deductions on your primary or your secondary home you must live in one home as a primary home and you must call the other property your second home for income tax purposes. The structure can be a mobile home, a trailer home, a single unit home, a house boat, or condominium. If the second home you choose to designate is a rental, then you must meet the residency requirements of the IRS in order to claim it. You must live there at least 14 days of each year or you must live there more than 10% of the days that the home was used as a rental.

You can deduct property taxes on a second home if you are the mortgage holder and the property secures the note. If you default on the note the lender will be able to take the home to satisfy the amount left on the mortgage. The IRS rules are identical for a second home, in this case. If you are in the lower bracket of taxable income you may be able to deduct your mortgage interest with a credit. If you are eligible for the credit on mortgage interest the lender will issue you the documents that you will need to file for the credit. Most of these type credits are restricted to first time home buyers and they will only be able to claim the amount of the interest that was paid in the tax year.

If you are qualified for the mortgage interest credit you will need to fill out and attach IRS Form 8396 to your return. Use Schedule A to itemize all the other deductions associated with home ownership. If you use a portion of your dwelling as an office you can use a percentage deduction. If you pay your mortgage early and you are charged a penalty for early payment you can use it as an IRS write off. You can deduct property taxes on a second home if you meet the IRS eligibility requirements.

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