Should You Consider Buying a Vacation Home?

A lot of people dream of one day owning a second home. A second residence is often desired for a vacation home or retirement home. There are many benefits to owning a second home, but there are also a few factors you need to take into consideration when making this decision. Here are some of the tax benefits to purchasing a second home:

1. Mortgage Interest - The same rules that apply to writing off mortgage interest for your first home also will apply to your second home. The interest rate on your mortgage is tax-deductible, and you can write off as much as 100% of the interest you pay up to a million dollars in debt ($1 million total - not each property!).
2. Property Taxes - You can also deduct your second home’s property taxes. These figures are based on the assessed value of your home, and unlike the mortgage interest tax deduction, there is no limit on the dollar amount that can be deducted.
3. Rental Use - When it comes to using your second home as a rental property, as long as the amount of time it is rented out equals 14 days or less for the calendar year, that rental income is tax-free. Which means that income is essentially “free” money for you! However if you plan to rent your home out for more than two weeks of the year, you can deduct a percentage of rental-related expenses and depreciation costs come tax time.

At Century 21 Sierra Properties, we believe we have several listings that would make the ideal vacation home! If you dream of a second residence in a peaceful wilderness setting, we have some beautiful homes and cabins located in the Stanislaus National Forest near the Sierra Nevada mountains. If you love skiing, we have a listing for a large cabin located in Bear Valley, perfect for families looking to ski at Bear Valley Ski Resort. If you’ve got the cash to spend, we have several million-dollar homes for sale that would make for very extravagant vacation homes, like this Mediterranean-style mansion that includes a wine cellar and two large terraces with views of the nearby Bear Mountains.

If you’re interested in any of our listings for a potential second home, give Century 21 Sierra Properties a call and let us help you make your dream come true!