Do you own a vacation home in the Lynnwood area? As with any other property you own, you have to pay taxes on it. Fortunately, the IRS may vacation home tax deductions, depending on how you use the secondary dwelling. Our real estate agents know the best practices for keeping taxes to a minimum.
You can reduce mortgage interest and real estate tax on a vacation home, just as you can for your primary residence. How are you using the vacation home? If you rent out the home, as most people do, then limit the rental days to no more than 14 days. This allows you to pocket the full rental income without having to pay rental income tax. This holds regardless of how much you’re charging the tenant.
The IRS may also classify your home as “dual-use” property if you use the home yourself AND rent it out. However, the home is considered rental property if the total number of personal use days does not exceed 14 days, or one day for every 10 days of rental —whichever is greater. [Read more…]