Tax Breaks For Owning A Second Home Explained In A New Article From Loan Love
SAN DIEGO, June 15, 2014 /PRNewswire-iReach/ -- LoanLove.com is a borrower advice website that is dedicated to keeping new home buyers and experienced home owners updated on current news and events which could affect their home loan options or their home ownership experience. Owning a home isn't a cheap expense, much less owning two. Luckily, tax breaks for owning a second home is available to home owners. Loan Love's new article, titled "Real Estate Second Home Tax Advantages In a Nutshell" helps readers understand the tax advantages of owning a second home – as well as the limits to these tax deductions.
As the article title mentions, there are tax deduction advantages to owning a second housing property, whether it is used as a vacation home or even as an investment property. The rules to these tax deductions apply differently however, which depends on how the property is used. The rules differ on whether the property is being used for personal use, as a rental income property or possibly a combination of both.
The article then goes to discuss tax deductions on a home bought for personal use: "Did you purchase a new vacation home, a condo at your favorite vacation spot or a house in Florida to escape the worst of the winter weather? As long as you aren't using your real estate as a rental, you can deduct mortgage interest at tax time just like you do your primary residence, up to $1.1 million of debt across both homes combined.
Like other real estate, you can also deduct your property taxes on your second home, although you won't be able to write off expenses like utilities or upkeep unless you can show the property includes an office devoted to your business."
The rules for second properties used as rentals are more complicated, however. The article states that tax rules for rental properties will usually depend on the amount of days a property has been rented out in a year. More so, home owners renting out property will need to come up with a rental income report if they want to deduct on their rental property's expenses.
There can be limits to these tax deductions as Loan Love's article points out. This is further elaborated in the article with the following: "Keep in mind, however, you can't have it both ways. If you are going to restrict your personal use in order to take the above-mentioned deduction, you won't be able to take the write-offs for the portion of mortgage interest that can't be applied as either a rental or personal-residence expense.
There are other limitations. Real estate losses are considered "passive losses" by tax law, meaning they usually are not deductible. But, if your adjusted gross income is less than $100,000, you can deduct up to $25,000 in losses each year to offset other income, such as your salary.
If your income tips over the $100,000 mark, that $25,000 allowance evaporates. You can, however, store passive losses and use them later on to offset taxable profit when you eventually sell that second home."
To learn more on tax breaks for owning a second home, please visit LoanLove.com to view the complete article.
Media Contact: Kevin Blue, LoanLove.com, 949-292-8401, email@example.com
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