Tax Tips For Second Home Owners
Posted on February 1, 2012 by TurboTax
When dealing with second homes, taxes typically get more complicated and will likely be influenced by how much time you spend under your new roof.
- If you use the property as a second home rather than renting it out, interest on the mortgage is deductible within the same limits as the interest on the mortgage on your first home (at least until Congress decides whether to eliminate or modify all such deductions). You can write off 100% of the interest you pay on up to $1.1 million of debt secured by your first and second homes and used to acquire or improve the properties.
- You can deduct property taxes on your second home. Unlike the mortgage interest rule, you can deduct property taxes paid on any number of homes you own.
- If you rent the property for 14 or fewer days during the year, you can pocket the rental buy cheap cipro income tax free. The house is considered a personal residence, so you deduct mortgage interest and property taxes under the standard rules for a second home.
- If the home is rented out more than 14 days, all rental income must be reported. Rental expenses are deductible, but proper documentation is needed to differentiate between the time the property is lived in versus rented. If you use the property more than 14 days, or more than 10% of the number of days it is rented, whichever is more, it is considered a personal residence and the rental loss can’t be deducted.
- If you limit personal use to 14 days or 10%, the vacation home is considered a rental property and up to $25,000 in losses (for example, maintenance costs) may be deductible each year.
Additional tax tips for second-homeowners can be found here on the TurboTax Web site.