Have you considered purchasing a second home? Well, with mortgage interest rates at a major low, right now is a great time to do so.
Whether you want to use it as a rental property, a place you can escape to on the weekends with your family, or a combination of both, owning a second home has many benefits. However, one benefit that is often overlooked are the tax breaks you can experience.
Second Home Tax Break You Need to Know
To help you better enjoy your future second home, here are some property tax breaks that may be of some benefit to you.
Mortgage Interest Tax Break
Did you know that even with a second home, your mortgage interest is tax deductible? The same rules that come with writing off mortgage interest for your first home apply to your second.
As long as you itemize your deductions by filing a Form 1040 and your mortgage is a secured debt on a qualified home, you can write off as much as 100% of the interest you pay on up to $1 million of debt.
Home Improvement Tax Break
If your second-home needs a little TLC, you’re in luck. You can deduct the interest on a home equity loan or credit. However, there are some caveats to this deduction:
- There is a limit if your home equity loan for either your first or second home is more than $50k as a person filing single or $100k for a married couple filing jointly.
- You can deduct a limit if the mortgage is more than the fair market value of the home.
Property Tax Break
While deducting your property tax may be a lot harder to do, it is possible for some. Property tax breaks are also great because there is no limit so you can deduct property taxes that are paid on multiple homes that you own.
Rental Tax Break
For many, owning a second home means you can pull in rental income for those days you are not preoccupying it. Well, if this what you plan on doing with your second home, there is some good news. If you decide to rent it out for less than 14 days over the course of a year, the rental income you earn will be tax-free.
The Bottom Line
The bottom line is that you owning a second home doesn’t have to be a pain in your wallets. It can actually be beneficial for you by providing you with some major tax deductions.
Get Help with Your Property Taxes from Hegwood Group
With only a few months left in the year, tax season will be here before you know it. When dealing with your taxes, especially property taxes, it is important that you have someone experienced by your side.
When dealing with your taxes, especially property taxes, it is important that you have someone experienced by your side. That is why the expert team at Hegwood Group is comprised of former county appraisers. This is what sets us apart and makes us your ideal property tax consultants.
To learn more about how we can help you this upcoming tax season, contact the Hegwood Group today.