The Tax Advantages of Owning Vacation Property

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Whether you generate income by renting your vacation home, or simply use it for your own pleasure, there are significant tax benefits:

Tax and interest deductions. You can generally deduct the real estate taxes and mortgage interest, just like you do for your primary residence.
Rental Deductions. If you use the property as a rental, you can also deduct a portion of your insurance payments, utility expenses, repair costs, the fees charged by service providers, plus the lost value due to general wear-and-tear.
Renal Income. If you rent the property out only occasionally (fewer than 14 days a year), you most likely won't have to pay taxes on the income.
Sale Profits. If you live in the property full-time for at least 2 years before selling it, you may not have to pay taxes on the sales profit ($500,000 limit for couples; $250,000 limit for singles).

January 2016 - Copyright 2015 Windermere Services Company. All Rights Reserved.

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