According to the National Association of Realtors®, last year the number of sales for vacation homes continued to rise following the staggering 64.5% gain in all investment home sales for 2011. The consensus has it that promising statistics are likely to repeat in 2013.
Perhaps it is an improvement in Annapolis’s vacation homes outlook, or maybe it’s because of the recent media focus on personal tax issues…whatever the reason, it looks as if 2013 may be seen as a particularly inviting time to make a first vacation home investment. Although I don’t offer tax advice (your CPA and financial advisor take care of that), there are several general reasons it makes good sense for some people to consider investing in Annapolis vacation homes.
Deductions on mortgage interest
The tax treatment of vacation homes depends on the number of days they are rented at fair market value (versus the number of days spent in personal family use). Even if vacation homes are rented, you may still be able to take tax deductions on the mortgage interest as you would your residence. Plus, if you rent your home for fewer than 15 days during the year, any rental income is usually tax-free.
Deduct for utilities and upkeep
If the personal use of vacation homes does not exceed 14 days per year (or 10% of the days rented at fair market value), they may well qualify as rental properties that are entitled to standard investment property deductions: utilities, repairs, upkeep, etc.
Qualified vacation homes allow their owners to make applicable tax deductions for home and furnishing value depreciation.
Proper planning using professional advice will result in a balance of maximized tax and investment benefits – while still retaining the element of personal enjoyment that makes Annapolis, Maryland vacation homes especially attractive. Talk to your tax professional to determine if the benefits make sense for you – then give me a call to take a look at some of the best current listings!
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