5 Tax Benefits of Owning a Second Home

Although owning a home is considered to be the American dream, more people are looking to own a second property due to the tax advantages that are available. You can reduce the cost of owning the property by deducting interest and certain costs. With the right steps taken, it can be affordable to purchase a second home.

1. Home Improvements

You can benefit from purchasing a fixer upper due to the many home improvement projects that will be needed. You'll get the chance to deduct the interest from a line or credit or home equity loan. Although you can save money on the improvements that are made, there are still a few restrictions. The amount that you deduct will have a limit if the second home exceeds the fair market value of the home. Limits are also enforced if the home exceeds $50,000 if you're filing single or $100,000 if you're filing jointly.

2. Renting Out the Home

Take advantage of receiving tax-free income if you rent out the property for 14 days or less each year. Depreciation costs can also be deducted if you rent it out for more than two weeks if there's rental income remaining after taking other types of deductions into account.

3. Mortgage Interest

Your mortgage's interest is deductible and 100 percent of it that can be written off if you pay up to $1 million of debt after purchasing a property from Wilmington NC home builders.

4. Property Taxes

Your home's property taxes are influenced by the value of your home after you purchase it from Wilmington Home NC Builders and can be deducted each year. There's also not a dollar limit on the amount of taxes that can be deducted. Unfortunately, you may land in a higher tax bracket if you can afford two homes, which can lead to fewer savings.

5. Selling the Second Home

Once you're ready to list the home on the market, you can avoid taxable income if you have a capital gain of capital gain of up to $250,000 or $500,000 if you file jointly. If you're interested in owning a second home, contact Trusst Builder Group to learn more about the models and floor plans that are available.