Clarifying tax savings on your Sarasota FL vacation home
February 3rd, 2007
Taxpayers are entitled to claim deductions for their principal residence and one vacation or second home. Except for unusual situations, the ownership tax breaks for a Sarasota FL home, as a primary residence, are generally limited to the mortgage interest and property tax deductions. However, tax savings from owning a second or vacation home are a bit more complicated and are often greater. Depending on your personal-use time, and with some advance tax planning, your vacation or second home can produce significant tax savings.
If your second home was rented or available for rental during all of 2006, with zero personal-use time, it is treated as rental property. Even if you occupied it a few days while making repairs, your second home falls into this desirable category.
The tax result is your rental income and expenses are reported on Schedule E of your income tax returns. Don’t forget the non-cash depreciation deduction for wear, tear and obsolescence, which can result in substantial tax savings, either in the current tax year or “suspended” for use in a future tax year.
Applicable deductible expenses in this category include mortgage interest, property taxes, insurance, homeowner association fees, utility bills you paid, repairs, and depreciation. You can also deduct reasonable “ordinary and necessary” travel expenses to inspect (but not occupy) your rental property.
Looking for that perfect Sarasota home for sale or condo? Realtor® Annette Smith is ready to help you buy or sell your dream property.
For all Sarasota real estate information, contact Annette Smith or John Allen at Allen Real Estate Services, Inc.
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