Tax benefits are definitely something to keep in mind if you are considering purchasing a second home at Deep Creek Lake. I put together some of the top tax breaks that you can use.
1.) Mortgage Interest – your mortgage interest is deductible up to $750,000 in combined total mortgages.
2.) Home Improvements – you can deduct interest on a home equity or line of credit (there will be limits).
3.) Property Taxes – You can deduct your second home property taxes up to $10,000/year for all state and local taxes.
4.) Renting Out Your Home – If you rent for 14 days or less over the course of the year, that rental income is tax free with no limit on what you can charge.
5.) When It’s Time To Sell – Capital gain of up to $250,000 on the sale of the principal residence may be excluded from taxable income if you have converted your second home to a principal residence. You can exclude $250,000 for single taxpayer or $500,000 for a married couple for the sale of a principal residence. In order to qualify as a principal residence, you have to have lived in the home 2 out of the last 5 years.
* Always consult a tax professional for verification of specific terms and tax benefits. Every situation is unique and different.