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Huntsville AL Vacation and Investment Home Taxes

By: Huntsville Real Estate Expert Mike Manosky On January 25, 2008

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:

  • When and under what circumstances do I have to pay taxes on rental income?
  • What sort of deductions can owners of rental properties take?
  • If my vacation home is considered a secondary home (not a rental home), what deductions can I take?

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!

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