Tax Tips


Tax Questions, Answered: Home Issues

April 28, 2014 : Lynn Ebel - The Tax Institute

Ed note: The experts at the Tax Institute have answered more of your questions, this time around home deductions and credits.

A Non-Rental Rental?

Question: After being unemployed for some time, I moved to another city where I work and rent an apartment. I kept my house.  My unemployed son lives there.  I continue pay the mortgage and utilities.  Can I deduct any expenses associated with the house?  How should I classify it for tax purposes? 

Answer: Assuming the child does not pay fair rental value, the home is still considered a personal use second home to you. No repair or upkeep costs are tax-deductible just like with any personal use home, but you may deduct qualified mortgage interest on Schedule A if the home qualifies as your second home. You also may deduct real estate taxes on Schedule A. Requirements for these expenses are further clarified in IRS Publications 530 and 936.

Energy Credit

Question: I bought a fancy new NEST thermostat to automatically regulate heating and cooling in the house and save on our utility bills. Can this purchase be used toward the energy credit? 

Answer: Unfortunately, there are no thermostats that qualify for the nonbusiness energy property credit for 2013. Not all energy-efficient improvements qualify for the energy property credit claimed on Form 5695, so be sure you ask about a manufacturer’s credit certification statement declaring that an item is an eligible building envelope component for this credit.

Lynn Ebel - The Tax Institute

Lynn Ebel - The Tax Institute

H&R Block

Lynn Ebel, JD, LLM, is manager of The Tax Institute's research department. Lynn specializes in real estate tax issues, including property transfers, passive activity losses, and bankruptcy issues.

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