Friendly Tax Treatments Boost Second Home Sales - What Are They?

The number of U.S. second home buyers has steadily increased over the past 10 years. A recent article posted at Kiplinger.Com asserts the increase is a direct result of favorable tax treatment of some expenses related to owning a second home.

Favorable tax treatments for the personal use of a second home include:

Mortgage Interest
You can write off 100% of the interest you pay on up to $1 million of debt secured by your first and second homes which was used to acquire or improve the properties.

Property Taxes
You can deduct property taxes for any number of homes you own.

Tax Free Profit
Live in your second home for 2 years out of the 5 years before selling and the profit is tax free up to $500,000. Remember though, any profit that was negated by depreciation expenses when renting the home, will be taxable.

As a note: I am a Realtor, not a tax advisor, therefore Buyers should always consult with a tax professional about any and all specific tax implications of owning a second home either for business or personal use.

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