We have a vacation home that we rent out for 10 weeks during the summer. Can we take the mortgage interest as a deduction on Schedule A as well as the total mortgage payment as an expense on Schedule E?
Vacation home is rented 10 weeks a year. Where deduct mortgage interest and expense – Sch A, E or both?
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The answer depends on how long you stayed in the home. If you didn’t stay at all, then all income and expenses would be reported on Schedule E. If you stayed more than 14 days then it is considered a second home, and you would deduct mortgage interest and property taxes on Schedule A. It is also possible to use the home for both living and rental, so then you would divide the expenses based on the number of days it was used for living/rental. If this is the case, you won’t be able to deduct expenses above whatever income was earned, but you can still deduct on Schedule A. It can be somewhat complicated, so you should read all the details at the IRS web site and Publication 527 (Residential Rental Property). Links below.
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