Even if you are in love with your Main Line home and have not thought about buying a second one somewhere else, you may reconsider after looking at the tax benefits of owning two homes. Many politicians and celebrities use their ownership of two homes to ease their tax burden and so can you! Buying real estate is good for the economy on all levels, so our government grants some special tax breaks to encourage this behavior. Low interest rates may make this option more appealing, too!
If you do not rent out your home, or your second home, all interest up to $1.1 million can be deducted from your income. If you decide to rent out your home, things change a bit and you have to report that income. However, if you rent out your home for fourteen days or less, it does not count. Actually, you could rent your home out for $30,000 for one week and the IRS would not care. It only matters past day fourteen. This may pertain to those of you who rented out your homes for the U.S. Open last summer.
In addition, you can deduct the property taxes from each and every home that you own. Owning a second home can allow you to reside in a state with the most favorable taxes. As long as you live in a state for over half of the year, you can file your taxes in that state.
Enjoy weekend getaways and tax breaks if you consider making your home in two houses and smile as you make your purchase.