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!