Among the second home ownership perks aside from visiting Oxford for events, footballs games, or spending time with family and friends, there are a lot of tax benefits to owning a second home in Oxford. Here are the ways to prosper with your second home purchase.
Mortgage interest
That’s right! You can write off 100% of the interest paid on the mortgage of your second home up to $1 M of debt. This includes total debt taken for all properties.
Home improvements
Is your owning a second home in Oxford in need of repairs? Make repairs, deduct the interest on a home equity loan. There is a limit on the amount if the home equity loan on your main or second home is more than $50,000 if filing single or $100,000 if married or filing jointly. Also, the amount you can deduct has a limit if the mortgage is more than the fair market value of the home.
Property taxes
You can deduct 100% of your second home’s property taxes.
Rent possibilities
Ever considered renting your home out for football weekends? Because if a homeowner rents the home for no more than 14 days a year, the rental income is tax free. Now, are you considering renting for football weekends?
Visit this site: College Weekends: Gameday & Short-term Rentals
A homeowner will need to do some math if a renter stays for more than 14 days.
First, find the number of days you rented your home and divide that by the total number of days your home was used—whether it was you or a renter staying there. Do not include the number of days that the home was vacant.
The result is your rental-related expenses—which could range from utilities to the cost of a property manager—can be deducted. Now, a landlord can deduct the same percentage of depreciation costs if the property is losing value.
Avoid capital gains taxes
Also, a homeowner may exclude from taxable income any capital gain of up to $250,000 on the sale of the principal residence. The married/joint filers can deduct up to $500,000. Most noteworthy, a homeowner must own and use the principal residence for at least two of five years before the home is sold.