Hanging onto some extra real estate? You’ve probably thought about turning it into a source of profit. That’s a smart move, but did you know that you could also get tax benefits out of it? Learn more about the differences between owning a second home and managing an investment property before consulting the experts at A. Roberts & Associates for tax services near you!
Why Do People Buy a Second Home or Investment Property?
Most people who opt for a second home get one for the purpose of having a vacation spot when they want it and a source of income during the times they’re not using it. Investment properties, on the other hand, are purchased and managed for the sole purpose of turning a profit. Either way, you can be eligible for tax credits for your rental. And as you know, tax credits can impact your tax returns in many ways. Take a look at how you can get the most out of renting out your second home or investment property:
How to Utilize Your Home Away From Home
Even if you occasionally use your second home for vacationing during certain days of the year, you can still report tax deductions for your expenses when maintaining it as a source of rental income. The best part is that you can have more than one “second” home, spanning multiple locations and increasing your earnings potential.
To qualify for tax credits and deductions on your second home, the main stipulation that the IRS requires of you is that you must stay in the home for at least 14 days out of the year. This is one of the qualities that separates a second home from an investment property which has no occupancy requirement for the owner.
The Perks of Being a Landlord: A Small Guide
When buying an investment property to turn a profit, you can receive tax benefits through deductions on operating expenses and the cost of ownership. These expenses include:
- Maintenance
- Utilities
- Property taxes
- Mortgage interest
- Damages and repair
- Depreciation value
Investment properties come in many forms as long as they are used primarily as rental spaces. It could be a house, a condo, an apartment complex, an office building, and even a mobile home park. You just have to think outside of the box and figure out what’s best for your area.
Which One Should I Choose?
While the benefits seem similar, your decision should be based on your intentions for owning the property. Would you like to have a place to stay when you go on vacation, or are you only in it for the rental income? Second homes can give you a taste of both worlds, giving you a place to stay while offering tax incentives for renting it out the rest of the year. Investment properties, on the other hand, have the potential to generate more income and help you qualify for more tax credits and deductions.
Navigate Property-Based Tax Credits With A. Roberts & Associates!
Whether you buy a second home or an investment property, owning any sort of real estate can get complicated when it comes to your taxes. Schedule a consultation with A. Roberts & Associates today and let our financial experts help you get the most out of your property through tax benefits!