TaxConnections

Login | TAXPAYERS | TAX PROFESSIONALS-START HERE

Can I take a tax credit on interest paid for investment property in Puerto Rico as well as rental property in PR.? one of my clients is a resident of New York, but has two properties in PR. One is rented and the other is a vacation home. Can someone help me?

I understand that when income is been received you need to report worldwide income and credits. ive been trying to look for more information on this scenario but have been unable to get the right answer.

thank you,
Real Estate income and credits outside US.
TaxConnections Members... Answer This Question Want To be One of Our Tax Experts? Register Here

Tax Professional Answers

User Photo
John Stancil
There is no tax credit available for either of these items, but you may be able to take a deduction for one or both. The interest on the investment property is deductible to the extent that the client has qualified investment income. Form 4952 would be used to determine this, and the deduction taken on Schedule A. Qualified investment income does not include anything taxed at the long term capital gain rate. If the interest can't be deducted, it can be added to the cost basis.

The mortgage interest on the rental property is deductible on Schedule E. It would be treated the same as a rental property down the street. The mortgage interest on the vacation home would be personal mortgage interest deductible under the same rules for residences located in the US. Since it is a vacation home, it would be treated as a second residence.
Leave a Comment 207 weeks ago

User Photo
Question Owner
Mr. Stancil, thank you for your answer, let me correct myself with the tax credit I meant to say a deduction and your answer clarified all my doubts.
thank you.
Reply 207 weeks ago

Meet Leading Tax Advisors

User Photo Peter J. Scalise

Federal Tax Credits & Incentives Practice Leader

New York, NY

User Photo John L Stancil

Tax Advisor/CEO

Lakeland, FL

User Photo John R Dundon, II EA

Tax Director

Denver, CO

User Photo Kevin Johnson MS, JD, LL.M, CPA

Partner

Philadelphia, PA

User Photo Brian Weaver, CPA, MBA

Managing Tax Consultant

Des Plaines, IL

User Photo William Rogers, CFP, MBA, EA

Rancho Santa Fe, CA

Title

User Photo Clinton J Donnelly, LLM

International Tax Advisor

Panama City, Panama

User Photo Jim Marshall, EA

President/ Tax And Financial Advisor

Scottsdale, AZ

User Photo Brett A Thompson, JD, CPA

Managing Tax Lawyer

Katy, TX

User Photo Charles Woodson, EA

Tax Advisor/Fiduciary Coach

San Diego, CA

User Photo John Richardson

Tax Lawyer

Toronto, Canada

User Photo Clifford Benjamin

Senior Tax Principal

Daytona Beach, FL

User Photo Kazim Qasim, EA, CTC

Managing Tax Advisor/CEO

Orlando, FL

 

View/Select our Current List of Tax Topics

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Previous PageNext Page

INCREASE KNOWLEDGE WITH EVERY ISSUE OF TAXCONNECTIONS

 

Learn from tax advisors, straight to your inbox

Update My Email Address
Contact Us Today