My tenants left in Sept 2000 and I spent 6 months in the house fixing it up for sale. I hope to sell it this summer and am back at my primary home. Can I deduct this year's interest as a secondary residence? Or is it still a rental where I can deduct maintenance, depreciation, etc? There's not much benefit to calling it a secondary residence since I'll have minimal capital gains and still have $12K of accumulated depreciation. I'd be better off calling it a rental for 2001 even though it's been up for sale, not rent.Thanks!
Can I deduct this year's interest as a secondary residence? Qualified residence interest is interest that is paid or accrued during the tax year on acquisition or home equity indebtedness with respect to any qualified residence..A qualified residence includes the principal residence of the taxpayer and one other residence (i.e., vacation home) that is used by the taxpayer for a number of days exceeding the greater of 14 days or 10 percent of the number of days during the tax year that it is rented out at a fair rental value. However, if a dwelling unit is not rented at any time during the tax year, such unit may be treated as a qualified residence regardless of personal use. Or is it still a rental where I can deduct maintenance, depreciation, etc...even though it's been up for sale, not rent? My conservative response is "no". Although, capital improvements could be added to your basis in the property and reduce the amount of gain you would report on the sale.Others may have a different take on the situation.Gail~
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