Vacation and Second Homes On Singer Island Can Have Great Financial Benefits
Are you thinking about purchasing a second home on Singer Island? As you begin to travel down the road of buying your second home you should seek out as much financial advice as possible. The financial advice you receive can aid in making a decision that will lead to a profitable transaction. Consult your accountant or tax advisor before and during your new Singer Island Vacation or Second Home search. The advice you receive will assist with very imporant steps in this decision making process.
Things to Consider Before Buying a Vacation Home or Second Home?
Owning a second home is not easy and for the most part it does change your taxes and financial status. There are many things to consider starting from what can I afford, to location and then even do I rent or not? All of these are big decisions when you are speaking of second and vacation homes.
Things you should consider are:
- If you rent your home for less than 14 days a year, you are not required to report any rental income. This would allow you to deduct your mortage interest and taxes on your personal income tax.
- A rental with more than 14 days will need to be reported to the IRS on your Schedule E Supplemental Income and Loss. All income and expenses will need to be included. Any expenses for the rental will be deductions. You may want to consider some of these as deductions: mortgage interest, advertising the rental, cleaning, maintenance and upkeep of the property, insurance, rental management fees, real estate taxes, monthly utilities, and depreciation.
- Personal use of the rental. If you use the home at any time during the year, your expenses and the use of the property will need to be prorated and deducted from the rental expenses. You will want to keep very accurate records for your property, and always work with your financial advisor that specializes in rental income. The IRS Publication 527 is also available for more information, Residential Rental Property.
- Personal use of your second home. If you don't rent your vacation home out, you can take allowable expenses as itemized deductions on your Schedule A. Expenses like mortgage interest, taxes and insurance may be fully deductible.
- Selling your second home or vacation home. The sale will need to be reported as a gain or loss on the Schedule D, Capital Gains and Losses. You may have other options regarding the sale of your home, check with your financial advisor for the latest information. Another resource would be the IRS Publication 523, Selling your home.
Please speak with your financial advisor on all the benefits of a Vacation Home or Second Home. Make sure this is the right decision for you. Each person's situation is different and we want to make sure you are educated and knowledgable about owning a second home. When you are ready to view the available homes, just give us a call. We will be happy to find you the perfect second home that will meet all of your requirements.