Do Investment Properties Qualify for the Mortgage Interest Deduction?
Ask Money Girl: Deducting Mortgage Interest on an Investment Property
Q. I currently own a home but plan to buy an investment property with a friend. We will be equally responsible for making the mortgage payments. My question is, can I claim the mortgage interest deduction on an investment property?
A. The mortgage interest deduction only applies to interest you pay on a loan secured by your primary home or a second home (that you live in for a portion of the year), but not to rental properties that you don't occupy. You can learn more about the home mortgage interest deduction from a previous Money Girl article or podcast.
However, the good news is that the costs of renting out a property are generally tax deductible as business expenses. For instance, advertising, utilities, maintenance, insurance, taxes, and interest can be deducted from your rental income. Learn more in IRS Publication 527, Residential Rental Property and IRS Publication 535, Business Expenses.
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