2nd home tax implications
Hi, I am looking at getting a second home that I will be renting out. My question is how do people who do this report it on their taxes? Is it possible to do the 10% down and still classify it as an investment for federal tax purposes?
In order to legally qualify for a second home, you must occupy the property for a certain period of the year. You are free to rent it out the remainder. Your mortgage insurance, property taxes, and such are tax deductible as a second home. If you use it and claim it as an investment, you'd need a schedule E to report rents and likely a Schedule C for the "business" reporting. If you own a corporation, things get a little more complicated. I am not a CPA and cannot advise from here.
Cheers!
@John Carbone: On your taxes, you'll be able to classify it as second/vacation or investment, regardless of the mortgage docs. I would consult a CPA or two about it though. Also, but based on conversations with my CPA, it seems that classifying the property as investment rather than vacation will afford you an increased depreciation opportunity.
Hope this helps some.
Thanks Mitch, that was my understanding as well. I will seek out a CPA for official guidance, but I wanted to have some information beforehand.
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@John Carbone
The type of loan that you get has little to no impact to how it should be reported on your taxes.
If you are receiving rental income, you report it on your return.
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