Buying second home offers tax break, but at a price

Mortgage-interest deduction can be impacted by multiple refis on primary home

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A friend of mine thought he would take advantage of the rotten winter weather -- and the perception that real estate is about the same -- and make a low-ball offer on a piece of recreational property that one day could become his second home.His theory was that owners of summer lake cottages felt removed from their sunny getaways at this time of year and those older owners, reluctant to tackle another stretch of off-season maintenance and security, would especially be more likely to consider a cash proposal during the dark days of winter."Besides, I could borrow against my primary residence to pay for most of the place and then take a larger deduction on my income tax."While the off-season may be a terrific time to make an offer on a summer cabin, review your debt history on your primary residence if you plan to borrow against it and deduct the mortgage interest on your federal tax return. Under the mortgage-interest guidelines, taxpayers are limited to the original acquisiti...