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In 2010 my residency changed from the home I own to a home I'm renting, but I owned the mortgaged home all year. Is the deductable amount of mortgage interest paid pro-rated based on the date I moved? This is unclear to me (or I'm optimistic I can claim the full amount of interest for 2010) because I often see the principal residence rule using the phrase "majority of the time". I spent 75% of the year in the mortgaged house and 25% in the rental.

An IRS pub number, section, and paragraph would be greatly appreciated!

  • Do you still own the mortgaged home? – MrChrister Feb 2 '11 at 18:17
  • @MrChrister yes – mghicks Feb 2 '11 at 19:20
  • After checking IRS Pub 936, irs.gov/pub/irs-pdf/p936.pdf, this counts as a second home not rented. The mortgage interest is fully deductible whether it is my primary residence (main home) or not. I did not know mortgage interest on a second home was deductible! – mghicks Feb 2 '11 at 20:09
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http://www.irs.gov/publications/p936/ar02.html#en_US_2010_publink1000229891

If you still own it, you get to deduct all of it.

In my taxes I did online with TaxAct, it asked if I lived there or not and it just mattered which form it filed for me. With having tenants it was a 'business' form and I assume it would be a standard schedule A for personal. Either way the deductions are still mine to take.

  • I commented above before I saw your answer. Thanks very much! – mghicks Feb 2 '11 at 20:17
  • @mghicks - also answer your own question if you find the answer first. – MrChrister Feb 2 '11 at 20:20
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Very simple. If it wasn't rented, it's deductible as a schedule A home mortgage interest. If it was rented, you go into Schedule E land, still a deduction along with any/every expense incurred.

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