Real Estate (Taxes, Mortgage Interest, Points, Other Property Expenses)
This is archived information that pertains only to the 2002 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
What are the rules for mortgage interest on a manufactured home? Can I deduct the interest on the mortgage for the manufactured home if it is on a rented lot? Can I deduct the interest for the manufactured home and for the lot if I buy a lot for the home?
For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. This means your main home or your second home. A home includes a house, condominium, cooperative, mobile home, boat, or similar property that has sleeping, cooking, and toilet facilities.
The mortgage interest on a manufactured home may be deducted if the home is on a rented lot. If you buy a lot and place a manufactured home on it, the interest paid for the lot is also qualifying home mortgage interest, provided the mortgage is secured by the house.
References: 10.1 Captial Gains, Losses/Sale of Home: Property (Basis, Sale of Home, etc.) How do you report the sale of a second residence?
Your second home is considered a capital asset. Use Form 1040, Schedule D (PDF) to report sales, exchanges, and other dispositions of capital assets.
References: 11.3 Sale or Trade of Business, Depreciation, Rentals: Personal Use of Business Property (Condo, Timeshare, etc.) I received income for renting out my timeshare for a week. I understand that I don't have to report income from any rental less than 15 days, but the property management company reported that income to the IRS. Do I have to report it when I file?
If you use the dwelling unit as a home (based on degree of personal use) and you rent it for fewer than 15 days during the year, do not include any of the rent in your income and do not deduct any of the rental expenses. If you do not meet the tests for using your timeshare as your home, the income is reportable on Form 1040, Schedule E (PDF), Supplemental Income and Loss.
References: I rent my home out for two weeks each year. Do I have to show the income on my return?
If you use a dwelling as a home and rent it for fewer than 15 days during the year, do not report any of the rental income and do not deduct any expenses as rental expenses. In this case, you may deduct some expenses on Form 1040, Schedule A (PDF), Itemized Deductions, such as mortgage interest, property taxes, and any casualty losses. For additional information, refer to Tax Topic 415, Renting Vacation Property/Renting to Relatives.
References: I am renting a house to my son and daughter-in-law. Can I claim rental expenses?
In general, if you receive income from the rental of a dwelling unit, such as a house, apartment, or duplex, there are certain expenses you may deduct. Besides knowing which expenses may be deductible, it is important to understand potential limitations on the amounts of rental expenses that may be deducted in a tax year. Whatever expenses you are allowed to deduct will reduce the amount of taxable rental income. For example, if you have no significant personal use, but rent the dwelling unit to your son and daughter-in-law at less than fair market rental value, then you may only deduct rental expenses up to the amount of actual rental income (received). If you do not have significant personal use and rent to your son and daughter-in-law for more than 14 days per year, then the expenses will also be limited to the amount of rental income, but the excess expenses may be "carried over" to a future year.
For more information on which expenses to deduct, as well as limitations, refer to Tax Topic 414, Rental Income and Expenses, Tax Topic 415, Renting Vacation Property and Renting to Relatives, and Publication 527 (PDF), Residential Rental Property (including vacation homes).
References:
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