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As a homeowner, you should have a good understanding of what can and can’t be deducted from your taxes. This tax system is pretty straight-forward, but it can be a little more complex if you own a second home. So let’s take a look at a few key differences in tax breaks depending on whether you use the second home for personal use or if you rent it out.

If you use it for personal use…

If you own a second home and use it for personal use, you can deduct mortgage interest just like you would with your primary residence. The mortage interest deduction is a great way to make it easier to buy and own a home. In order to be able to deduct mortgage interest, the second home’s mortgage has to be a secured debt on a qualified home in your name. You can also deduct property taxes for a second home. Property taxes are typically a big portion of tax dollars — in the 2017 fiscal year, property taxes accounted for 45% of taxes collected in NYC. Property taxes can be deducted for all of the homes you own. Starting this year, the total of all taxes you are able to deduct is limited to $10,000 for one tax return. So if you own a second home, you may have already exceeded the limit with your primary residence. Tax accountants can help determine how much you’ll be able to deduct from both your first and second home.

If you rent out the home…

Many people who own second homes decide to rent out the home when they’re not using it. If this is the case with your second home, then tax breaks will be different. If you rent out the property for 14 days or less each year, you don’t have to report the income you receive from the renters to the IRS. This is because the house is still considered a personal home due to the fact it was rented for such a short amount of time. In this case, you can still deduct mortgage interest like you would for a primary residence. However, if you rent out the home for more than 14 days, the property will be treated as a rental property. You will need to allocate costs for both personal and rental use but rental expenses can be deducted from your taxes. If you are using the home as a rental property, you may want to invest in accounting services so tax accountants can better help you understand what can and cannot be deducted.

Hopefully, this article provided helpful information regarding tax breaks for your second home. If you have any further questions, consider investing in the help of tax accountants to ensure you’re getting all the tax breaks you qualify for.