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5 Tax Breaks You Can Get If You Own A Second Property
Mortgage Interest
Interest paid on a home loan is one of the biggest tax deductions you can take, and it’s the best way to own a property at an affordable rate. Mortgage interest deductions apply if you have a mortgage on your home, allowing you to improve your second property.
Property Tax
Owning a second property allows you to deduct property taxes at a local or state level, depending on the location and value of your house. Getting deductions on local tax bills can save you money when buying, but if you do own two properties, your taxes will likely fall on the higher side.
Capital Gains
Before you sell, figure out which property is your primary residence and which is your second domicile. If you want a tax break on your second property, you must make it your primary residence, and this will shelter you from paying a bigger capital gain tax.
Rented Homes
Tax rules apply to rented properties depending on how often it is for personal use or rental. If you rent it for prolonged periods of time, you can subtract expenses like repair and maintenance costs as well as utilities and depreciation of furniture.
Home Improvements
Your second home may require modifications or installation of equipment that qualifies as a tax break. You can itemize home improvements that install special medical equipment, railings, or elevators, enlarge doorways, move electrical outlets, change doorknobs, or lower the cabinets.