Reefgazer Posted April 22, 2017 Share Posted April 22, 2017 We own a second home that is not our primary residence. We also do not rent it out, but of course we have to pay to keep it up. Is a second home that we do not rent out considered an investment property for tax purposes? I have a feeling we could have gotten some sort of deduction for it all these years and we have not taken it, so I'm considering filing an amended return for the past few years if we would be able to get some sort of deduction. Does anybody know how this situation works? Is vacant property(separate from the second house) also considered an investment property? Quote Link to comment Share on other sites More sharing options...
SereneHome Posted April 22, 2017 Share Posted April 22, 2017 You can't really deduct anything except property taxes and mortgage interest until you sell the property. 1 Quote Link to comment Share on other sites More sharing options...
Guest Posted April 22, 2017 Share Posted April 22, 2017 Re: second home, federal taxes. You can deduct mortgage interest and property taxes. Only if you are running it as a *business* (renting it) can you expense the costs of running it. Keep receipts of all the improvements you make (not maintenance, but capital improvements) because when you sell it, this will help mitigate the capital gains tax. (Ouch. We sold our second home last summer...) AND if the second home is in another state, you have to pay attention to THEIR tax policy as well. (Ouch some more.) Quote Link to comment Share on other sites More sharing options...
mlktwins Posted April 22, 2017 Share Posted April 22, 2017 We have a second home that is not an investment property. It is paid off so I can only deduct property taxes. Quote Link to comment Share on other sites More sharing options...
Evan Posted April 23, 2017 Share Posted April 23, 2017 We own a second home that is not our primary residence. We also do not rent it out, but of course we have to pay to keep it up. Is a second home that we do not rent out considered an investment property for tax purposes? I have a feeling we could have gotten some sort of deduction for it all these years and we have not taken it, so I'm considering filing an amended return for the past few years if we would be able to get some sort of deduction. Does anybody know how this situation works? Is vacant property(separate from the second house) also considered an investment property? *For various reasons our family has a few homes that we own and use beyond our primary home. We do not rent these homes. From a tax standpoint if/when we were to sell these properties we would likely be subject to paying capital gains as no portion of the gain would be exempted as with a primary residence. The capital gains tax (presuming of course there is some) is paid in the tax year the property is sold. For now our taxes are not increased due to the increasing value of the property we are holding. *As we itemize our deductions we are eligible to deduct the property taxes paid on all of these personal use only homes. In reality we can deduct a portion of our property taxes because we are above the itemized deduction threshold so some of our deductions are limited. None of these properties are mortgaged but if they were we might be able to deduct some of the mortgage interest. If your properties are mortgaged then check the specifics of what interest is deductible. I think the current rule is up to two homes so if you have more than two then you may only be able to deduct interest on your primary and the first vacation home but not the second. *Sometimes having a second or third home in a second or third state may make you considered as a resident or a part year resident of that state. The state where our primary home is very wide reaching about who is considered a resident of the state. My wife sometimes does work in the state where we own one vacation home so we do file and pay income taxes in that second state. The other involved states either do not consider us residents or do not have state income tax. If you have homes in more than one state make sure you do not need to file a state return in more than one state. *We do own other properties which we rent. For these properties we report the rent earned as income schedule E. We can deduct the cost of property taxes, insurance, some maintenance etc against this to determine our actual true profit from the property. That profit is taxed in various ways. We use our rental properties only for rental purposes but if you have a property with split purposes like with an owner living in one unit of a multi family or a vacation home you also use for short term rentals there are ways to prorate the deductions so you aren't artificially deflating your profit. This particular area seems to one that IRS is really looking at now. I think that should have covered all of your points. If you have general questions feel free to ask. Quote Link to comment Share on other sites More sharing options...
Guest Posted April 23, 2017 Share Posted April 23, 2017 I just want to add that capital gains stinks. Quote Link to comment Share on other sites More sharing options...
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