Do Investment Properties Qualify for the Mortgage Interest Deduction?
Laura Adams, MBA
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?
Answer. 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.
(correction_with_script)
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 527opens PDF file , Residential Rental Property and IRS Publication 535opens PDF file , Business Expenses.
Mortgage Image courtesy of Shutterstock
About the Author
Laura Adams received an MBA from the University of Florida. She’s an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura’s previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.