real estate tax tips: Tax tips for your vacation home
- 07/07/11 08:38 AM
If you are thinking about renting out your vacation home for extra income (or conversely, using your rental property for personal use), here are some tax tips to keep in mind. First and foremost, be aware that the number of days you (or family members and certain others) use your vacation home will be treated by the IRS as "personal use" which can adversely affect tax benefits. The IRS uses a fourteen-day-or-ten-percent test, meaning if you stay in the home more than 14 days or 10% of the total days it's rented in a calendar year (whichever is greater), the deductiblity … (3 comments)
real estate tax tips: 1031 Exchange - don't overlook depreciation recapture
- 03/02/10 07:14 AM
The Surprise Tax Investors contemplating a 1031 exchange are usually focused on the capital gains which are taxed at 15%. However, they often overlook "recaptured depreciation" which is taxed at 25%. As this tax is based on the total of all the depreciation taken over the years, it can in many cases, particularly with lower gains in today's market, more than offset the capital tax benefit, if not structured correctly. For example, a house purchased in 2000 for $100,000 is sold for $120,000. After closing costs, the capital gains are only $4,000. At 15% Federal Tax Rate (ignoring State Taxes), this would only be $600 in taxes. However, the recaptured depreciation … (0 comments)
e-PRO REALTOR Larry Hansen, CPA and Broker / Owner of Calif Desert Realty resides at PGA WEST in La Quinta, CA and specializes in gated and golf communites in La Quinta PGA West and surrounding areas. Visit his website at www.CalifDesertRealty.om and his La Quinta, CA neighborhood listings at www.Point2Homes.com
If you are thinking about renting out your vacation home for extra income (or conversely, using your rental property for personal use), here are some tax tips to keep in mind.
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