Tax Benefits Of Vacation Homes!
August 2, 2017 – Own a vacation home? Considering buying one/ Wouldn’t it be nice if you can get a tax deduction for your vacation home?
But before you list with one of the popular online rental companies, make sure you know the rules. If you’re not careful, especially when you’re looking at renting out a second home, it can cause you some tax troubles.
The amount of time you personally spend at your second home determines how much tax you might owe on rent, as well as deductions you can claim against the property.
Consider these 4 basic second-home situations:
1. Renting Under Two Weeks: You may take the mortgage interest deduction and rent your house out tax-free for up to 14 days a year.
2. Renting Full Time: If you move but keep your house as a rental property, you stop deducting mortgage interest on the building on the date of your move, and you begin taking rental property deductions and depreciation when tenants move in.
3. Renting Part Time: If you use a second home for more than two weeks personally, some of the expenses may not be fully deductible.
4. Local and Sate Taxes: Finally, don’t overlook any state and local taxes that might be assessed on the rental of your home, whether a primary residence or a second home.
Understanding the rules and deductions that apply to your situation is complex. Don’t do it alone! Call the tax experts at Jeanine Hemingway, CPA to help you make the most of your vacation home investment!