The Tax Difference in Second Homes

Reblogger Michelle Carr-Crowe-Top 1% Diamond Certified Real Estate Team Sells Cupertino San Jose Homes-Just Call 408-252-8900
Real Estate Agent with Get Results Team...Just Call (408) 252-8900! CalBRE# 00901962 Lic.1985
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Thinking of purchasing a second, vacation or investment home? Do your research first. It is so important for home buyers to fully comprehend the ownership and tax differences between owner-occupied principal residence, vacation home, second home and investment property before committing to a purchase. The right choice can be a blessing, the wrong one a curse.

Original content by Patty Clark DRE# ER300941

 

A principal residence and a second home have some similar benefits, but they have some key tax differences. A principal residence is the primary home where you live and a second home is used mainly for personal enjoyment while limiting possible rental activity to a maximum of 14 days per year.10213246-250.jpg

Under the 2017 Tax Cuts and Jobs Act, the Mortgage Interest Deduction allows a taxpayer to deduct the qualified interest on a principal residence and a second home. The interest is reduced from a maximum of $1,000,000 combined acquisition debt to a maximum of $750,000 combined acquisition debt for both the first and second homes.

Property taxes on first and second homes are deductible but limited to a combined maximum of $10,000 together with other state and local taxes paid.

The gain on a principal residence retained the exclusion of $250,000/$500,000 for single/married taxpayers meeting the requirements. Unchanged by the new tax law, the gains on second homes must be recognized when sold or disposed.

Tax-deferred exchanges are not allowed for property used for personal purposes such as second homes. Gain on second homes owned for more than 12 months is taxed at the lower long-term capital gains rate.

This article is intended for informational purposes. Advice from a tax professional for your specific situation should be obtained prior to making a decision that can have tax implications.

 

Buy or Sell with Patty Clark              Denver/Aurora Co. and surrounding areas 

Chris and Patty

 If you would like to be sent properties on a daily or  weekly  basis just call or email me and let me know your wants and  needs. A match will be made with a home you love and with  monthly payments you can afford. I specialize in first time  home buyers and sellers who are ready to make a move.


patty@morningsidehomes.com

www.morningsidehomes.com
Cell: 720-231-5200                       CRS,GRI,WCR,SFR,CNE, MRE

 

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Debe Maxwell, CRS
www.AtHomesCharlotte.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
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Hi Michelle! Thanks for re-blogging this! I had no idea that a second home could not be rented more than 14 days in a year. We don't sell many second homes and when we do, they are used 6 months out of the year and vacant the other 6 months!

Have a great weekend!

Jun 22, 2018 09:51 PM #1
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Paul S. Henderson, REALTOR®,CRS,
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I appreciate the reblog of this information Michelle, I must have missed this one!

Jun 22, 2018 09:57 PM #2
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