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second home mortgage tax deductions
Buying a Second Home?
I’m considering purchasing a second home as an investment home. I will rent it out and hve the renters paying my mortgage on the home. I intend to make no profit on the monthly rent checks, but only intend to profit when selling the house years down the road. What kind of taxes will I be paying when I finally decide to sale this property and if I chose to purchase this with an interest only loan, will I have the same tax deductions with my investment property as I do my primary property? Thanks!
It’s very unlikely that you will see any profit from price appreciation for MANY years. You will likely lose about 20-25% of your investment’s value in the next 2 years. It could take 10 years or more for prices to return to the levels of 2005.
Do you have reserves if the people don’t pay rent? You should be able to pay for the extra rent for at least 6 months in case you can’t find a tenant for a few months, will you be able to afford the payments?
If you do make a profit, you will pay whatever the capital gains tax rate is at the time.
Housing is not a good investment anymore. Housing prices do not always appreciate. Look at the stock market crash from a few years ago. We still haven’t gotten back to those levels 7 years later. It will be a long time before housing will be a good investment again. I strongly recommend that you find something else to invest in.
Tax Law, Real Estate & Credit Tips : Time Share Tax Deductions