by: Gaye Jones ~ AnnieMac Home Mortgage
With the changes in the tax laws and rising standard deductions, many are finding that their primary home isn’t the great tax advantage that it used to be. If you’re looking for tax advantages, you might consider a 2nd home, vacation home or Rental Property.
Many of the costs of a 2nd home that you utilize only for your enjoyment can be combined with your primary home deductions on your itemized form. Or, if you vacation rent your property you can take advantage of the tax deductions available for rental property on the schedule E.
A 2nd home should be, at minimum, 50 miles from your current home. If it’s located in a vacation area (ie: waterfront, the mountains, etc) then many times we can overcome the 50-mile rule of a 2nd home if we can document that it is a true “vacation” home. With the onset of COVID many are wanting a “get-away” to isolate or just relax.
Interest Rates are as competitive for 2nd homes as they are for primary homes and only require a 10% down payment. If you plan to do long term rentals, then it would be considered an investment property which requires a higher down payment and higher interest rates. Always check with a tax consultant or your financial advisor before deciding regarding tax incentives and investments.
If you watch much HGTV then you’ve seen the series “Vacation Home for Free”. Most properties will pay for themselves if you vacation rent for 14-15 weeks each year.
If you’ve always wanted that lake home, ocean front condo or that mountain cabin then reach out to a mortgage professional to determine if it’s a viable option for you!