If you are an actual owner of a timeshare and pay a portion of the mortgage, interest and insurance on the property, you have a right to claim your part of the mortgage interest on your taxes. The Internal Revenue Service lets you to write off your mortgage interest on one second home, as long as the second home has areas for sleeping and cooking and a bathroom facility. In addition to meeting the second home requirements, to write off your timeshare’s mortgage interest, the property must also meet the time and debt tests.
Calculate the amount of time you spend at the timeshare if you rent out the property. Only the time you have access to the timeshare is counted when calculating the time rented and personal use. As of 2013, you have to use the timeshare for more than 14 days, or more than 10 percent of the days you rent out the timeshare, whichever is longer. For example, if you have access to the timeshare for 180 days a year and rent it out for 160 days, you must stay at the property at least 17 days to claim the mortgage interest. You don’t have to consider the remaining 185 days because you don’t have access to the property.
Estimate your total mortgage debt. To deduct mortgage interest, your total amount of mortgage debt can’t be more than $1 million. For example, if you owe more than $1 million on your main home, you can’t claim mortgage interest.
Download Form 1040 and Schedule A from the Internal Revenue Service website.
Enter the total amount of your first home and timeshare’s mortgage interest in the line labeled “Home Mortgage Interest and Points Reported to You on Form 1098” on Schedule A. You can find this information in Box 1 on the Form 1098 you received from your lender. If you paid points on the mortgage, add the amount from Box 2 in with your mortgage interest amount.
Complete Schedule A to figure your itemized deduction amount.
Compare your itemized deduction amount to the standard deduction. In the left-hand column on page 2 of Form 1040, you’ll find the standard deduction amounts for the year. If the amount of your itemized deductions is more than the standard deduction, you should use the itemized deductions. If not, use the standard deduction. Enter the larger of the two in the line labeled “Itemized Deductions or Standard Deduction” on the second page of Form 1040.
- If you take the standard deduction, you are not writing off your mortgage interest.
Angela M. Wheeland specializes in topics related to taxation, technology, gaming and criminal law. She has contributed to several websites and serves as the lead content editor for a construction-related website. Wheeland holds an Associate of Arts in accounting and criminal justice. She has owned and operated her own income tax-preparation business since 2006.