second mortgage

Guest 0.10 Dollars($)

I have a mortgage for the house and a second mortgage for the land where I would be building a new home. Is the interest for the 2nd mortgage be deductible?

colin · Posted: Wed Feb 14, 2007 12:58 pm Post subject:

Hi Harry,

Welcome to Mortgagefit forum.

The interest you pay for the 2nd mortgage will not qualify as being a deductible mortgage interest unless construction has started on the land. Plus you should be able to occupy the new home within twenty four months.

Otherwise, the land will be considered as an investment and if you itemize your deductions it would represent investment interest.

Colin

Guest 0.10 Dollars($)

What does it mean to itemize deductions?

kenstampe · Posted: Thu Feb 15, 2007 9:36 am Post subject:

Evan,

When you fill out your tax returns, you put in your W2 income for the year. Then you list your charitable giving, state income taxes you've paid, etc. Stuff that brings your W2 income down so you pay less taxes. The things you list (or itemize) are totalled and the government let's you take the GREATER of the things you listed or the standard deduction.

What colin is communicating here is that if you don't list or itemize enough to total more than the amount the government gives you already, then the mortgage interest is just another item to list which may or may not push your total higher than the government's standardized adjustment.

He's just giving a word of caution.

colin · Posted: Wed Feb 21, 2007 5:26 pm Post subject:

Thanks Ken for explaining it, your method of explaining things is excellent. Smile

Colin

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