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Are There Advantages To Owning A Second Home?

Jon Neal, Tax Advisor, Second Home Tax Advantages

Whatever the location, size, or value of a second home, certain tax advantages are built in. However, your opportunity to benefit from them depends on how you use the property.

Personal Use

Both property taxes and mortgage interest are as deductible for a second home as they are for your primary residence — and are subject to the same limitations. If you file a joint return, you cannot deduct interest on more than $1 million of acquisition debt ($500,000 for married persons filing separately) on one or two homes.

Two tax advantages of homeownership are not available for a second home — the immediate deduction of mortgage points when purchasing and the capital gain exemption when selling. Both tax breaks require the home to be your “principal residence.” However, you can deduct the points on your second home’s mortgage over the loan’s term.

Rental Use

More tax advantages become available if you forgo some of your personal use in favor of renting out your second home for part of the year. But there may be drawbacks as well.

If you rent out your home for 14 or fewer days during the year, you do not have to report rental income on your tax return, regardless of the amount, and there is no effect on your mortgage interest deduction. But you cannot deduct any rental expenses.

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Tax Advantages To Owning A Second Home

No matter the location, size, or value of a second home, certain tax advantages are built in. However, your opportunity to benefit from them depends on how you use the property.

Personal Use

Both property taxes and mortgage interest are as deductible for a second home as they are for your primary residence — and are subject to the same limitations. If you file a joint return, you cannot deduct interest on more than $1 million of acquisition debt ($500,000 for married persons filing separately) on one or two homes.

Two tax advantages of homeownership are not available for a second home — the immediate deduction of mortgage points when purchasing and the capital gain exemption when selling. Both tax breaks require the home to be your “principal residence.” However, you can deduct the points on your second home’s mortgage over the loan’s term.

Read more

Are There Advantages To Owning A Second Home?

Jon Neal, Tax Advisor, Tax Blog, Milwaukee, Wisconsin, USA, TaxConnections

Whatever the location, size, or value of a second home, certain tax advantages are built in. However, your opportunity to benefit from them depends on how you use the property.

Personal Use

Both property taxes and mortgage interest are as deductible for a second home as they are for your primary residence — and are subject to the same limitations. If you file a joint return, you cannot deduct interest on more than $1 million of acquisition debt ($500,000 for married persons filing separately) on one or two homes. Read more

Tips For Staying One Step Ahead Of Tax Issues

Jon Neal, Tax Advisor, Tax Blog, Milwaukee, Wisconsin, USA, TaxConnections

The last thing you need as a small business owner is to have to spend time unraveling tax problems you could have avoided. There are many tax issues that can trip up small business owners — here are a few.

Mixing Business And Personal

Keeping your personal bank and credit card accounts separate from your business accounts isn’t always easy. But “commingling” business and personal accounts creates a record keeping nightmare. When it’s tax time, you may not be able to identify all the appropriate business expenses. As a result, it could be difficult to accurately determine your business income and you might lose deductions. Read more

Why It Is Important To Keep An Eye On Your Cash Flow

Jon Neal, Milwaukee, Wisconsin, USA, Tax Advisor, Tax Blog, TaxConnections

If profits are up and the projections look good for the next month or two, should you kick back and relax? Maybe not. No matter how positive other signs may be, if you’re not keeping a close eye on your company’s cash flow, things could go haywire.

Even a temporary crunch resulting in late debt payments could cause your credit rating to fall and your cost of borrowing to rise. If you miss a loan payment or two, the lender might even call the loan. Here are some suggestions to help you maintain a healthy cash flow. Read more

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