Huntsville AL Vacation and Investment Home Taxes
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:
- IRS Publication 527: Residential Rental Property
- IRS Tax Topic 415: Renting Residential and Vacation Property
- IRS Publication 925: Passive Activity and At-Risk Rules
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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