"Bluedog" <cj2185[at]yahoo.com> wrote:
- quote -

No. You deduct interest ONLY. You NEVER deduct a loan
repayment, ever.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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Bluedog wrote:

- quote -

I should have elaborated - I am going to deduct, of course,
the 2nd mortgage either on my personal 1040. But my line of
thinking was not represented well in my initial questioning.

Essentially, can my monthly payments on my second mortgage
be considered a business expense i.e. rent? I guess I would
be charging my business rent to occupy the building.

Thanks.

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Bluedog wrote:

- quote -

Yes.

- quote -

Any depreciation on the building will have to be
"recaptured", i.e. taxable, at that time.

ChEAr$,
Harlan Lunsford, EA n LA

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"Bluedog" <cj2185[at]yahoo.com> wrote:

- quote -

If your business is a proprietorship, the interest on the
2nd would go on Schedule C, since you can trace the proceeds
to just business costs. The cost of the business building
would be depreciated over a 39-year life, beginning with the
month you obtained a Certificate of Occupancy and began
using the building for business.

When you sell your property, you'll need to allocate the
selling price between your home (and associated land) and
the business building (and associated land). I'm not sure if
the gain on the business building in this case would be
limited to the depreciation you claimed, as would be the
case for a portion of your home used as a home office, and
I'm not where I can check that out.

--
Tom Healy, CPA
Boulder, CO
Web: http://www.tomhealycpa.com

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Greetings Taxpayers!

I got a second mortgage on my home to start a business. With
the money, I built a new building on that same property to
house the business and purchased equipment and supplies to
run the business.

Can I/should I deduct the 2nd mortgage as a business expense?

How will that effect my taxes and property when I decide to
sell my home and buildings some day?

Thanks!

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