Taxfilter follow-up question about A Whole Thing
April 3, 2023 9:32 AM Subscribe
Months ago I got good support here on something I was trying to do (and did do): getting a mortgage on a condo in a town I didn't live in at the time and wasn't employed in. I now live in that town and am (self-)employed there. A question about mortgages and taxes!
Because I knew I was going to be self-employed in a way lenders weren't going to be into, I got a mortgage and accompanying bad interest rate for a second home. (Why they looked at my salary and thought I was the kind of guy who can swing this kind of monthly outlay for somewhere I went occasionally on vacation I neither know nor care.)
After my first mortgage payment, I changed my homeowner's insurance to "primary residence" and changed my address to here with every possible entity after a brief conversation with my loan coordinator at my credit union along the lines of "soooo I pretty much decided to live here, period, and need to know if it's going to cause me trouble with anyone when this shows up as my billing and mailing address everywhere." (He was patient about it, almost certainly knew the second home thing was a pretext, said nobody's going to care. I didn't exactly thing anyone was but I had to sign a document in my closing attesting that I had not misrepresented blah blah blah.)
This is all well and good. What I'm wondering now is whether the fact that the loan originated as a second home means I can't deduct mortgage interest when I do my taxes this year. (If I was not middle-aged when I started typing this question, I most certainly am now.) And if so, if there's anything I can do about it. I am in Texas if that affects the answer.
Thanks for any expertise on this really boring subject.
Because I knew I was going to be self-employed in a way lenders weren't going to be into, I got a mortgage and accompanying bad interest rate for a second home. (Why they looked at my salary and thought I was the kind of guy who can swing this kind of monthly outlay for somewhere I went occasionally on vacation I neither know nor care.)
After my first mortgage payment, I changed my homeowner's insurance to "primary residence" and changed my address to here with every possible entity after a brief conversation with my loan coordinator at my credit union along the lines of "soooo I pretty much decided to live here, period, and need to know if it's going to cause me trouble with anyone when this shows up as my billing and mailing address everywhere." (He was patient about it, almost certainly knew the second home thing was a pretext, said nobody's going to care. I didn't exactly thing anyone was but I had to sign a document in my closing attesting that I had not misrepresented blah blah blah.)
This is all well and good. What I'm wondering now is whether the fact that the loan originated as a second home means I can't deduct mortgage interest when I do my taxes this year. (If I was not middle-aged when I started typing this question, I most certainly am now.) And if so, if there's anything I can do about it. I am in Texas if that affects the answer.
Thanks for any expertise on this really boring subject.
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There may also be benefits to you, though, for officially declaring this to be your sole/primary home - a primary home is often eligible for income tax breaks and protection in bankruptcy that a second home is not. It's worth talking to a local real estate lawyer about this. I know when I bought my home a "Declaration of Homestead" was filed along with the other paperwork.
posted by mskyle at 10:04 AM on April 3, 2023 [1 favorite]