Many people don’t think about taxes during the summer months but it is a great time to do so! If you are planning on spending a relaxing vacation at a vacation home, there are some tax implications you should be aware of:
- Paying mortgage interest on a second home? A second home can be a house, condo, mobile home, co-op or similar property as long as there are sleeping, cooking and toilet facilities. So if you have camper with the above facilities you may be able to deduct the mortgage interest you pay on any mortgage against the property. If this applies to you call us for a free evaluation of your tax situation to see if you qualify for this deduction!
- Is your vacation home used exclusively for personal use? If so, the mortgage interest and real estate taxes can be included in your itemized deductions on Schedule A. And time share owners you may be able to deduct time share fees as real estate taxes.
- Did you rent out your vacation property? The property must not be used personally more than 14 days or 10% of the days it is rented to others at fair rental price. If the property is considered a rental, you should keep detailed records on the amount of rental income you receive, the expenses you pay (utilities, cleaning, repairs, insurance, mortgage interest, taxes, depreciation and other associated costs), and the number of days rented. Many times vacation rentals produce a passive loss, which can offset other passive income (wages!) so a little record keeping can be beneficial. Should you need assistance in record keeping for your rental, contact us to learn about our services. We can take the stress out of tax time by doing all the work for you in advance!
While these are all beneficial tax deductions, there are possible limits and exclusions that can apply. To make sure you are taking all possible deductions call Esposito Tax Services today 203-296-0391!