Aside from being an addition to one's assets, there are tons of benefits that come with owning a second home, and these involve tax breaks. Owning a home usually offers some tax deductions, and listed below are some of the advantages and benefits of owning a second house.
When it comes to owning a second house, the very first advantage is the interest on your mortgage is deductible. There will also be instances that one can write off as much as 100 percent of the interest that is paid up to $1 million of debt.
According to Record Pub, there will also be property tax deductions. If you were able to pay real estate property tax on a property you own, then you can deduct the amount of tax that was paid on the tax form. The property tax must be paid to the government agency which collects it.
Realtor also said that owning a second home will also deduct the tax on home improvement costs. However, there will be a couple of exceptions. For instance, it will limit the amount you can deduct if the home equity loan on the first or second home is more than $50,000, if filed as single, or $100,000 if married or filed as a conjugal property. The amount one can deduct also has a limit if the mortgage is more than the fair market value of the property.
If you decide to rent out the home for 14 days or less over the course of the year, you are not obliged to pay a rental income tax, and there is no limit on what the homeowner would charge per day or week. These are only some of the advantages of having a second home when it comes to saving on taxes. It is important to be informed so that you can file correctly during the tax season.
