Duarte/Downey Real Estate Agency, Inc



Posted by Duarte/Downey Real Estate Agency, Inc on 5/22/2016

Have you always dreamed of owning a second home? While owning a vacation home may see like a huge expense, it can also provide some savings. There are special tax rules and regulations that apply to second properties that could have you vacationing on the cheap. Before you buy a second home you should consider how you will use it. The Internal Revenue Service will categorize the home for tax purposes on how it is used. Here are the ways it can be categorized: Residence: It will be considered a residence if you use it for personal housing at least part of the year. If your home is a residence you can deduct the mortgage interest under your vacation on line 10 of Schedule A. Investment: If the property is rented most of the year, it's considered a rental or investment property. In order to have a deduction on an investment property your rental deductions can't exceed gross rental income, less interest, taxes, and costs to advertise the property. If your income totals more than the rental income received you won't be able to list the loss (the excess expenses) on your income tax return. Another benefit of a rental property is that you may be able to deduct the value of your rental property over time. This is called depreciation. Depreciation is the wear and tear on a property over time. This can all be confusing so it is best to contact a tax advisor before purchasing a second home. There are some other key points to keep in mind: If the property is purely an investment, all the expenses are deductible against the rent. You don't have to claim income if you rent the property for less than 14 days a year. There are lots of other rules about timing and claiming a property as a residence or an investment. Always make sure to consult with your tax advisor.





Posted by Duarte/Downey Real Estate Agency, Inc on 3/23/2015

You have earned it, you have saved your money and now is the time to buy that vacation home you have been wishing for. Buying a second home can be a very different experience than purchasing a primary residence. So, if you are in the market for a vacation home, there are some things you will need to consider first: ?What is the purpose of the home? Are you buying the second home for vacation or investment? Knowing what you intend to do with the property primarily will help you identify the features that matter most in the home. ?If the second home is for investment and you plan to rent it you will need to research how the property’s use will affect your financing options, taxes and insurance. Before you buy consult an accountant or financial planner to determine which of these factors could impact your financial situation. ?How far are you willing to travel? If you are using the home as a vacation spot, think realistically about how far you are willing to travel. According to the National Association of Realtors, 31 percent of vacation homes are typically within 100 miles of the owner's primary residence. ?See what the area is like off-season. Many times vacation homes are in seasonal destinations and the surroundings can change significantly throughout the year. Find out what challenges you may encounter in the off-season with the home. If you are thinking of buying a second home it is important to use a real estate professional with knowledge of the specific marketplace.