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Please refer to IRS Publication 936 , Home Mortgage Interest Deduction - http://www.irs.gov/pub/irs-pdf/p936.pdf
You can deduct home mortgage interest if all the following conditions are met.
You file Form 1040 and itemize deductions on Schedule A (Form 1040).
You are legally liable for the loan.
There is a true debtor-creditor relationship between you and the lender.
The mortgage is a secured debt on a qualified home in which you have an ownership interest. "Secured debt" and "qualified home" are explained later.
For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. This means your main home or your second home. A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities.
The interest you pay on a mortgage on a home other than your main or second home may be deductible if the proceeds of the loan were used for business, investment, or other deductible purposes. Otherwise, it is considered personal interest and is not deductible.
Main home. You can have only one main home at any one time. This is the home where you ordinarily live most of the time.
Second home. A second home is a home that you choose to treat as your second home.
More than one second home. If you have more than one second home, you can treat only one as the qualified second home during any year.
There is no requirements to have a main home in order to claim mortgage interest deduction for a second home. You may claim mortgage interest deduction for the second home even if you do not own a main home.
Thanks for your response to my question. However, I am still a bit unclear about the condition under which the interest on a mortgage could be included on form
1040, schedule A.
My confusion with a 2nd home was if the first home or place of residence has to be "owned outright", or if living in a rented apt.,would be qualification for deducting the interest. That seems clear to me, that living in a rented apartment, in the US, and owning a home elsewhere has nothing to do with the eligibility to claim the interest.
This quotation from the reply is what I do not clearly understand. Quote "if the proceeds of the loan were used for busines, investment or other deductible purposes. it could be deducted", otherwise if it is considered "personal interest" it cannot be deducted". End of quote. What is meant by "the proceeds of the loan is used for business or investment", To whom is that referred? Is it to the lender, or the borrower?
Your eligibility to deduct mortgage interest on the second home doesn't depend on facts related to your primary home.
Thus - you own your primary residence or you are renting it - that is irrelevant for deduction a mortgage interest on the second home.
Above I listed IRS requirements for claiming a home mortgage interest.
As we are talking about "qualified home" - your second home is a qualified home as long as all requirements are met - as you see above none of listed requirements are connected to owning or renting the main home.
The phrase you quoted above - is for "the interest you pay on a mortgage on a home other than your main or second home... " - for instance - if you have two secondary homes - the interest for third home is not deductible.
As I see from your explanation - that is not your situation.
Let me know if you need any help.