Category Archives: Vacation Rental Property

Tax Benefits of Owning a Vacation Rental Property

Tax Benefits of Owning a Vacation Rental Property

Tax Benefits of Owning a Vacation Rental Property

Many families enjoy a yearly trip to a favorite ski resort or coastal paradise, and this leads to the eventual thought of whether or not it would be a smart investment to purchase a vacation property instead of renting each year. If you are considering the possibility of buying a second home or vacation rental, then it is important to understand the tax benefits of owning a vacation rental property.

Much of the taxes that you can deduct on your vacation home depend on the amount of time that you spend at the property for personal use. As a standard, property taxes and mortgage interest can be deducted on up to two homes totaling $1 million in mortgage debt. This is allowed whether or not you actually rent out the condo or home when you are not using it yourself, so you are guaranteed a tax break no matter how you use your vacation property.

From there, the tax rules become a little more complex, which is why speaking with your accountant to verify your personal tax situation and understand the exact ramifications for your personal time at the property is so important. Let’s take a quick look at some of the different options for tax deductions when you rent out your vacation property, so you can have a general idea of what to expect.

3 Tax Scenarios for Vacation Rental Homes

First, homeowners that spend a good deal of time at their vacation home (over 14 days) and rent it out a good portion as well (over 14 days) can deduct some of their utilities, maintenance, operating costs, HOA fees, insurance, and depreciation for that rental period. In this scenario the home has a time period where it is considered a private residence and a timeframe where it is treated as rental unit. The extra deductions can help you offset the rental income you have made up to the point where you zero out the income with tax deductions.

Second, a vacation rental investor who stays in the home less than 14 days or 10% of the rental period, whichever is greater, can treat the vacation home as a rental property. This allows the investor to deduct a far larger percentage of the utilities, maintenance, HOA dues, insurance, depreciation, and operating costs based off of the total days the home was used. In addition, if the rental income does not completely cover the cost of the rental timeframe, you might be eligible to write off up to $25,000 in rental losses. This is strictly for individuals who show an adjusted gross income of under $100,000 and gets progressively lower as the income approaches $150,000 and is phased out completely.

Third, property owners who rent their vacation home less than 15 days of each year do not have to pay any taxes whatsoever on the rental income. So, if you have the good fortune to have a vacation property or second home in an area with a big yearly event and you can rent it out for two weeks or less at a high rate, then you have the benefit of enjoying that income completely tax free.

Now that you have an idea of the many tax benefits associated with owning a vacation rental property, it is important that you speak with your accountant to confirm exactly what type of rental owner you are and how that might earn you even greater tax deductions from your second home.

Preston Guyton is a professional Realtor? serving the Myrtle Beach real estate market. For more information on Myrtle Beach homes, contact Preston today or visit http://www.prestonguyton.com.

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Filed under GardenCityRealEstate, Mortgage Rates and Updates, MyrtleBeachRealEstate, Vacation Rental Property

New Construction vs Established Homes

New ConstructionThere is currently a lot of discussion happening in the real estate industry about the merits of new construction homes vs the merits of older established homes. There seems to be a real push for new construction homes as they are a bit of a status symbol, but there are some definite assets to older homes that today’s new homes simply cannot equal. This is not to say the older or newer homes are superior to one another, simply that there are some differences that should be considered before purchasing either.

Let’s examine the pros and cons of each in turn. New construction homes are simply that; new. Everything in them is shiny and usually the latest model/style. New homes will typically conform to all current community standards, and be more energy efficient. Another asset is that these homes are usually in newer developments that have excellent landscaping and services, and the area itself usually has quite a high property value. Now, there are some cons as well. New homes are being constructed at such a rapid rate and such a high cost that many contracts are going to the lowest bidder. Some contractors that bid low are able to do so by rushing through the building process and cutting corners by using cheap supplies and labor. This, again is not to condemn contractors, simply that it is an issue that needs to be considered in new construction homes. Also, if you take a look at the average new development you will notice that the actual size of the properties is much smaller than those of established neighborhoods.

As stated above, if you are looking for a larger piece of property then an established area might be a better choice. It is also said that the level of craftsmanship utilized in the building of older homes exceeds that of many new developments. This opinion is hit and miss. Like any area of business there are those who excel and those who do not, no matter what year it is. Also, many older homes have a “character” that it is almost impossible to duplicate in new homes. Many new homes are built utilizing these “character” elements but the effect is never the same. With either form of housing the final choice is, of course yours. Simply make sure that you consider all the aspects of the homes construction, property, benefits and drawbacks so that you can make an educated decision on which type of home to purchase.

Preston Guyton is a professional Realtor® serving the Myrtle Beach real estate market. For more information on Myrtle Beach homes & properties, contact Preston today or visit http://www.prestonguyton.com

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Filed under GardenCityRealEstate, MyrtleBeachRealEstate, Vacation Rental Property

Tax Benefits of Owning a Vacation Rental Property

Many families enjoy a yearly trip to a favorite ski resort or coastal paradise, and this leads to the eventual thought of whether or not

Tax Benefits, Real Esate, Vacation Rental Property

Tax Benefits of Owning a Vacation Rental Property

it would be a smart investment to purchase a vacation property instead of renting each year. If you are considering the possibility of buying a second home or vacation rental, then it is important to understand the tax benefits of owning a vacation rental property.

Much of the taxes that you can deduct on your vacation home depend on the amount of time that you spend at the property for personal use. As a standard, property taxes and mortgage interest can be deducted on up to two homes totaling $1 million in mortgage debt. This is allowed whether or not you actually rent out the condo or home when you are not using it yourself, so you are guaranteed a tax break no matter how you use your vacation property.

From there, the tax rules become a little more complex, which is why speaking with your accountant to verify your personal tax situation and understand the exact ramifications for your personal time at the property is so important. Let’s take a quick look at some of the different options for tax deductions when you rent out your vacation property, so you can have a general idea of what to expect.

3 Tax Scenarios for Vacation Rental Homes

First, homeowners that spend a good deal of time at their vacation home (over 14 days) and rent it out a good portion as well (over 14 days) can deduct some of their utilities, maintenance, operating costs, HOA fees, insurance, and depreciation for that rental period. In this scenario the home has a time period where it is considered a private residence and a timeframe where it is treated as rental unit. The extra deductions can help you offset the rental income you have made up to the point where you zero out the income with tax deductions.

Second, a vacation rental investor who stays in the home less than 14 days or 10% of the rental period, whichever is greater, can treat the vacation home as a rental property. This allows the investor to deduct a far larger percentage of the utilities, maintenance, HOA dues, insurance, depreciation, and operating costs based off of the total days the home was used. In addition, if the rental income does not completely cover the cost of the rental timeframe, you might be eligible to write off up to $25,000 in rental losses. This is strictly for individuals who show an adjusted gross income of under $100,000 and gets progressively lower as the income approaches $150,000 and is phased out completely.

Third, property owners who rent their vacation home less than 15 days of each year do not have to pay any taxes whatsoever on the rental income. So, if you have the good fortune to have a vacation property or second home in an area with a big yearly event and you can rent it out for two weeks or less at a high rate, then you have the benefit of enjoying that income completely tax free.

Now that you have an idea of the many tax benefits associated with owning a vacation rental property, it is important that you speak with your accountant to confirm exactly what type of rental owner you are and how that might earn you even greater tax deductions from your second home.

Preston Guyton is a professional Realtor? serving the Myrtle Beach real estate market. For more information on Myrtle Beach homes, contact Preston today or visit http://www.prestonguyton.com.

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Filed under Vacation Rental Property