Know your real estate deductions

Avoid tax confusion after refi

Learn the New Luxury Playbook at Luxury Connect | October 18-19 at the Beverly Hills Hotel

I have a friend who has worked the upscale second-home market in and around Vail, Colo., for years. He's seen people pay astronomical prices when values were on the uptick, and watched others gather bargains from folks desperate to sell when residential property headed downhill. Earlier this year, he had a customer who refinanced a primary residence and took out a significant amount of money to help with the downpayment on a second home. While this is done all the time, part of his justification for doing so was the mammoth mortgage interest deductions he would receive on both homes. Buyers need to be aware of the mortgage interest ceilings, especially heading into the April 15 tax deadline. According to the Internal Revenue Service, taxpayers may deduct interest on no more than a combined total of $1 million of "home acquisition debt" for a primary home and secondary residence. (The limit is reduced to $500,000 if you are married and filing separately. See Inter...