Financial Benefits of Owning a Second Home

Owning a second home may afford you many of the benefits of primary homeownership, whether it is for your own vacation use or it’s a property that you lease out for income purposes.

If you intend to use the property as your personal getaway, you can deduct your mortgage interest and property taxes. In addition to those savings each year, you will possibly enjoy increased appreciation, and your increased equity in the property will eventually put more money in your pocket. You may also opt to occasionally rent the property out to offset some of your costs.

Although you are not allowed to deduct mortgage interest from a property that is used strictly as a rental property, you can deduct operating expenses up to and exceeding your rental income. You can also deduct any losses when you sell the property.

Before you invest in a second home or income property, speak with your accountant or tax advisor. There are strict rules about personal usage and length of ownership that apply to investment property if you hope to enjoy the maximum tax benefits. Either way, owning a second home can prove to be a smart move in your financial future.