| Maybe you have already heard that by owning a | | | | rental property, your expenses could not be larger than |
| second home you can get some tax advantages – | | | | the income. |
| and this is true. There are rules and regulation for | | | | In the case you rent your own vacation home for less |
| some special tax that applies to second properties, but | | | | than two weeks, you can avail a tax break because |
| the guidelines may be a little obscure. In this article we | | | | there is no need for you to declare the rental income |
| walk you through it for better understanding. | | | | on your tax return. The whole rental income is, |
| To find out the kind of tax break you can avail as | | | | basically, tax free. |
| related to your vacation home, you have to determine | | | | Do not forget that your interest is always completely |
| your purpose of using the property, and in what | | | | deductible when buying a second home. In addition, the |
| category the Internal Revenue Service will place it. | | | | second home is not always a strict asset planted on |
| Your vacation home will be considered as a residential | | | | the ground as it could be any asset, recreational |
| home if you plan to use it for personal use and spend | | | | vehicle, or a house boat on the condition that it has all |
| at least 14 days there, or ten percent of the total days | | | | the requirements of the Internal Revenue Service to |
| that the property is rented. This will enable you to | | | | be considered as a house. |
| deduct mortgage interest on your vacation home of | | | | In short, try to keep these three simple rules in mind |
| about a million dollars on both your private property an | | | | when thinking about possible tax advantages of |
| as much as a hundred dollars more for home equity. | | | | owning a vacation home: |
| This is because of what line 10 of Schedule A say | | | | • All your expenditures are deductible against the |
| about deductible property taxes, regardless of the | | | | rent, if you do not use the property. |
| number you have. | | | | • The rent you get does not have to be reported |
| On the other hand, you may want to run your second | | | | on your tax return if you rent the property for less |
| home as rental property. That means you rent out the | | | | than 14 days a year |
| property for more than fourteen days a year and | | | | • Your expenditures are prorated against your |
| does not use or stay there for more than fourteen | | | | income if you use the property for more than 14 days |
| days or more than ten percent of the amount of time | | | | a year. |
| of rental days. You will be required to declare the | | | | You can capitalize on these tax breaks when you |
| rental income, and minus the operation expenses | | | | own a second home. You should take this chance |
| during the rental period which include maintenance, | | | | particularly during these economically problematic days. |
| management fees, upkeep, advertising, insurance, | | | | Tax breaks should not be the only reason you think of |
| mortgage interest, devaluation, and taxes. Bear in mind, | | | | buying a second home. Hopefully, there are other |
| though, that if your vacation home is categorized as a | | | | ways you can enjoy it, too. |