2nd Home Investment

You may wish to invest for Retirement, Investment, Rental, Joint-ownership or create your own Timeshare. A 2nd home gets special treatment under the Internal Revenue Code that is not available for a third or fourth home!

I advertise my 2nd homes with the 2nd Home Journal, it’s a National publication advertising current homes on the market, the most spectacular homes in the most desirable vacation spots in the world.

From the 2nd home journal ~
Tax breaks can give 2nd homes an edge over other investments. Owners of 2nd homes have long deducted mortgage interest and property taxes on itemized tax returns. More recently, the exclusion of capital gains on sales of primary residences and Section 1031 in-kind exchanges, which defer capital gains tax on property held for business or investment purposes. A 2nd home gets special treatment under the IRS code, that is not available for a third or fourth home, says Michael O’Keefe, senior tax research analyst for H&R Block. However, you can itemize deduction of mortgage interest for two homes only.

Capital gains exclusion on the sale of a residence or on a Section 1031 exchange, each apply in different situation, and can involve changing “use” of a home from secondary to primary, or from personal use to business or investment purposes. People are changing how they view vacation or recreational property, according to Scott Saunders, senior vice president of Asset Preservation, Inc. “A lot of this is driven by a market that has done amazing things. In the old days, the cost of holding a vacation property didn’t justify owning it as an investment – but now it does.”

Increasing your use of a 2nd home makes it easier to shift primary residence from one home to another in order to get the $500,000. per married couple or $250,000 for single taxpayer, exclusion of capital gains on the sale of a primary residence. You must have owned the home for 2 years, and lived in it as your primary residence two out of the last five years to claim this exclusion.

Owner who rent their 2nd home, more than 14 days can write off depreciation in proportion to the time it is rented plus other operational expenses. It is advisable to obtain professional help to set up these type of investments.
The tax advantages can flow thru your personal tax return.

Even if the 2nd home is rented out thru-out the year you still can get 2 weeks of personal use at no cost to the owner, often used for repair and maintenance.

My library of 2nd home journals has many published articles that can help answer your questions for 2nd home investments.

My support team can assist in buying and selling, with out of state agents, financing, title search, inspections, closing just to name a few. Let me know where your 2nd home should be, I will find it for you.

Gert Baldwin - Keller Williams Realty