We own rental properties and are able to take advantage of depreciation which is nice. We are not however able to take itemized deductions because we don't have enough of them to qualify. I think the issue is the house we live in is paid off and in my mother in laws name so we can't take advantage of the mortgage interest deduction most people can use. I am thinking of getting a vacation property and renting it out when we are not using it. Since our primary residence is not owned by me or my wife can we still deduct mortgage interest on the vacation property/rental as a second home? ====>correct; unless the house is in your nameUnless you're listed on the property's deed, you can't be considered its legal owner
;however as you can see, you can claim your mortgage interest expenses on second home only on SCh E of 1040 as rental home NOT on SCh A of 1040. To maximize deductions, you need to be actively involved in the rental property. you also have to use it for at least 14 days or 1/10th of the time that you rent it out. If you don't rent it out at all, you don't have to use it for it to qualify , then you can claim it only on SCh A of 1040
Do you have any other ideas for increasing our itemized deductions?========>you may consider bunching your itemized deductions on SCh A of 1040. This means that you pile on your itemized deductions every other year, giving yourself the maximum itemized deduction for that year. You then take the standard deduction in the alternate years, when you have fewer itemized deductions. During the year you plan to itemize, do everything you can to make your itemized deductions exceed your standard deduction. You may pay every bill that will result in an itemized deduction. You particularly want to bunch expenses for those itemized deductions that are subject to a threshold amount I mean that is, are not deductible until they exceed a specific percentage of your adjusted gross income |