Purchasers of second homes should be aware that, according to the IRS, taxpayers who are married and filing jointly can’t deduct interest on more than a combined total of $1 million of home acquisition debt for a primary and a secondary residence.

Taxpayers also may deduct up to a combined total of $100,000 of home-equity debt on their first and second homes.

After refinancing, a home owner can only deduct interest on the original amount of the loan at the time they refinanced, plus $100,000.

Buyers and refinancers also can deduct loan fees – points – if the money was used to buy or improve their home. They can’t deduct them if they refinanced to lower the interest rate.

Source: Inman News, Tom Kelly