Tax Tips For Second Home Owners
Tax tips that will save you money.
Thinking about owning a second home for vacations or renting out? Taxes become a bit more complicated for second-home owners – but don’t be intimidated. The simple tips below will help you learn how to find and take advantage of the tax breaks and deductions available to you.
Itemize Your Deductions
There are some significant tax write-offs available to homeowners that are well worth the additional record keeping. You can deduct mortgage interest on up to two properties, both a primary and secondary home. You may deduct real estate taxes for every home you own, as well as other qualifying expenses such as state and local income taxes and personal property tax, with a $10,000 cap ($5,000 cap if married filing separately). Itemizing deductions is always a wise idea that can only benefit you. If you’re unsure where to start, speak with a taxation specialist.
Tax Rules For Rentals
If you’ll be renting out your second home for all or part of the year, there are some tax regulations you’ll need to understand and follow. These include:
- You could be taxed on your rental income either as a landlord or a self-employed individual.
- If you provide services such as meals, cleaning, transportation, tours, entertainment, etc. to your tenants, you will classify as self-employed and may have to pay a self-employment tax of 15.3% in addition to your income tax.
- If you stay at the property during the year and rent it out for 14 days or less, (such as for short-term events in your area like major sports games, concerts, etc.), you won’t be required to report your rental income to the IRS.
- Generally, if you do not occupy your second home during the year, you can deduct rental expenses on Schedule E. Within certain limitations, you may be able to deduct costs for maintenance, cleaning, advertising, utilities, repairs, insurance, and other associated fees.
Get Help From A Tax Professional
Do you want to get the most out of your second home? Don’t try to do it alone. Work with one of our professionals here at Alron Taxes, Inc., a wholly owned subsidiary of Alron Enterprises, Inc. Alron Taxes, Inc. specializes in providing taxpayers the highest quality, expert assistance with tax preparation services. We’ll make sure you receive every possible tax benefit and maximize your tax savings. Give us a call at 321-951-7626 or contact us here. We look forward to working with you!