Second Home
Please help me with a strategy. I have an income of 200,000+ and am trying to get as much taxes back as possible on my earned income. I was thinking about buying a second home which would allow me to write off the interest on my earned income and then gain on appreciation. I have read the IRS doc's and it is hard to tell if I would get it all back. Also, would it be fraudulent if my brother lived in the place for free, as long as I stayed there for more than 2 weeks a year?
The mortgage interest and property taxes on a second home are deductible on Schedule A, but only if you itemize.
You are correct about the IRS documentation being difficult to read. There are provisions in the tax code that limit (reduce) itemized deductions for high income taxpayers. Your income level may be at the point where the second home mortgage interest and property tax deductions would have a limited effect upon your tax liability.
As far as your use of the property is concerned, you do not have to use it at all during the year to be able to claim it as a second home. Allowing a family member to occupy the property rent free also has no bearing on your ability to take the second home deductions.
Consult your personal tax preparer for specific details.