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Second Home Tax Benefits Explained

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By : Roby Hicks    99 or more times read
If you want to own a second home, now is the perfect time. Properties are sold cheaply today. There is also a sign of improvement in the real estate industry. You can hold on to it and sell it in the future for a better value. However, you do not have to resell it to benefit from it. You can use it every time you want to have a break. You do not have to rent a property out of town just to unwind. In some instances, you can have it rented. Make sure that you keep a record to take advantage of its tax benefits.

There are several reasons why one purchases a second home. He may want it for himself. Owning two homes allows him to escape his busy life for a while and relax. This is extremely a great deal if you have purchased a property near wonderful locations. Aside from that, other people who want to enjoy a lone time away from busy city life can rent your home for the meantime. You can even use it as security for a loan application.

Before purchasing the property, you should know how you intend to use it. Is it going to replace your primary home? Or is it going to your vacation home? It could also be an investment property, perhaps. It is essential that you identify its type so that you will know the applicable tax rules.

As you may already know, second homes have different tax benefits from investment properties. Main homes and second homes have similar tax benefits. In both cases, the mortgage interests as well as the property taxes are deductible. If the property is rented, how it is taxed will depend on the number of days it was rented. It may not be taxed if it has been rented for fourteen days or less.

As mentioned above, you can also earn from the property if you have it rented. You do not need to pay taxes if it has been rented for fourteen days or less. However, if it has been rented for more than two weeks, you need to report the earnings and it will be taxed accordingly. You can deduct the expenses used in the operation of the property while it was rented though.

Some of the items you can deduct are utility expenses incurred when your property was occupied. You can also deduct the repairs and maintenance of the property. If you advertised the place for possible tenants, you can also deduct the expenses you incurred there. All the expenses related to the operation of the property are deductible so see to it that you record them.

Aside from the tax advantage, you may also use this as security for your loan together with your main home. For the loans where you used the said properties as security, you can write off the interest paid. However, it has a $1.1 million limit.

In order to fully benefit from the second home, see to it that you consult a tax expert. The tax benefits can be more complex than you think, so see to it that you have an expert working with you.
Check out the properties in Paradise Valley AZ Homes. There are also Five-Bedroom Property in Paradise Valley AZ and Golf Course Homes in Paradise Valley AZ.

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