We all know that tax season is right around the corner, so this week I wanted to spend some time covering issues related to paying taxes on vacation or investment homes. Many homeowners in Huntsville either have a vacation home elsewhere or own an investment property in town but can these homes truly be claimed as vacation properties when it comes to taxes?
This article from RealEstateJournal.com answers this and other important questions, such as:
Once you have determined which category your property qualifies as, the chart below gives you a quick overview of what you should expect during tax season:
Vacation-Home Category | Rental Income | Deductions | Losses |
Masters | not taxed | not available besides mortgage interest and property taxes | no tax benefit |
Secondary | taxed | available | may possibly report a loss if mortgage interest and property taxes exceed rental income; but can't carry the loss forward or backward to apply to another tax year. |
Rental | taxed | available | can carry losses forward, or back |
Other helpful links on this topic:
To learn more about Huntsville AL real estate, please call me at 256-508-0211 or visit MoveToHuntsville.com. You may also begin searching the Huntsville MLS!