If it is a 2nd home then it is a vacation home, then mortgage interest is deductible. If you rent it out more than 14 days a year, then things change a bit, BUT, I could not find anywhere that stated that the vacation home must be in the U.S.
If you "live" on the island, there is a period of time where you have to travel back to the states for a week or two to continue citizenship, not sure of the specifics, but you can find that out elsewhere.
Definitely either get 2nd mortgage OR new mortgage for a vacation home from the States.
If you rent out your home for 14 days or more per year, it is considered an investment and is subject to slightly higher borrowing percentage, but you also qualify for numerous deductions, include depreciation of the main asset (home) as well as depreciation of everything in the home from flooring, draperies, appliances, etc and you can still take the deduction for mortgage interest.
This all assumes that you remain a citizen of the U.S. and file your taxes in the U.S.
Hope this helps?
SK
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