Monday, June 11, 2018 / by Veenstra Team
Kalamazoo MI: Dreaming of owning a second home on a lake or a condo in two places to be able to be snow birds? We would love to help you accomplish that dream! Our team is able to help you buy a home in the SW Mich area and we can connect you to a pre-screened REALTOR of integrity in any state or Canada so you will be sure you are working with a great agent anywhere. We are often asked whether a second home get taxed like a primary residence? They do have some key tax differences. Here is a quick summary of what we understand to be the differences. This article is intended for informational purposes and advice from a tax professional for your specific situation should be obtained prior to making a decision that can have tax implications. Note that we have been told that a principal residence is the primary home where you live and a second home is used mainly for personal enjoyment while limiting possible rental activity to a maximum of 14 days per year.
Under the 2017 Tax Cuts and Jobs Act, the Mortgage Interest Deduction allows a taxpayer to deduct the qualified interest on a principal residence and a second home. The interest is reduced from a maximum of $1,000,000 combined acquisition debt to a maximum of $750,000 combined acquisition debt for both the first and second homes.
Property taxes on first and second homes are deductible but limited to a combined maximum of $10,000 together with other state and local taxes paid.
The gain on a principal residence retained the exclusion of $250,000/$500,000 for single/married taxpayers meeting the requirements. Unchanged by the new tax law, the gains on second homes must be recognized when sold or disposed.
Tax-deferred exchanges are not allowed for property used for personal purposes such as second homes. Gain on second homes owned for more than 12 months is taxed at the lower long-term capital gains rate.
If you are a casual looker who wants to keep an eye on the market anywhere in SW MI, you can use FindHomesinKalamazoo.com and search for any lake homes in SW MI. We are happy to help you create a hyper focused search for you that meets your criterion for any Lake Homes in Kalamazoo and all of West MI. We also want to make sure that you we explain that, as a buyer, you need to be prepared in some special ways to succeed in this market. There are some tips that allow us to help our buyers get offers accepted more often. We want you to have that advantage. You can always reach us at 269-350-5514.