A tax break that is! Well buying that chalet in the mountains surrounding Ruidoso may get you
some much needed peace, quiet rest and relaxation but get ready for some tax rules, which,
though worth maximizing to your benefit, can get fairly complicated. It all boils down to how
often you use your new vacation home, how often somebody else does and how long it may sit
empty. So here we go!
Rent a Bunch, Use a Bunch
Rent your home more than 14 days a year and use yourself more than 14 days … or ten percent
the total rental days (whichever is more) and you fall into this category. Vacation homes fitting
in this niche are considered personal residences. This is good as our IRS buddies let you deduct
interest on up to $1 million of mortgage debt and property taxes. Accurate accounting for rental
income and expenses for your casa is essential. Do it right with the advice of a tax professional
and you’ll be fine with no or minimal liability.
Rent a Bunch, Use a Bit
The next vacation home tax niche involves properties very little by the owner but rented out
quite a bit. Now you fall under the tax rules for rental properties rather than personal residences
if you rent more than 14 days a year and use less than 14 days or 10% of the rental days (
whichever is greater). Really, can’t they make it simpler? Anyway without offering a tx primer
which is far beyond my scope and expertise, just remember to keep accurate records so you can
defend whichever category you decide you fall.
Use a Bunch, Rent a Bit
Okay flip it around now where you’re the primary user, more than 14 days, and you have only
minimal rentals, less than 15. These vacation homes are considered personal residences again, so
you can deduct interest and property taxes as in the first category. Guess what? You don’t even
have to declare a hot red cent income in this category. Crazy eh? … this is Uncle Sam we’re
talking about here! But he also doesn’t allow any deductions maintenance and operational costs.
Summing it Up
The rules are complicated as we’ve only touched on them herein. Surprise! But, determining
how you will use your vacation home and then boning up on the rules for your ‘use’ category
is definitely worth it. And I can’t stress enough how accurate and detailed recordkeeping and
seeking the advice of your CPA or Enrolled Agent are essential components of successful
vacation home ownership. Remember your Uncle is not going to make it easy on you, but it’s
your responsibility as citizen to lean the rules, play by them and then outsmart him!
Available Ruidoso Homes – Call Now for Expert Help
The information being provided is for consumers\' personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing.
All information provided is deemed reliable but is not guaranteed and should be independently verified.
For more information about Ruidoso, please contact
GoSecondHomes.com is a real estate search engine that helps you find Ruidoso retirement, vacation and second homes for sale. Using our program can help you make a more informed real estate decision. By presenting retirement, vacation and second home real estate information all on one site, you can compare Ruidoso to other vacation, retirement or second home offerings.You can define your real estate search in Ruidoso, NM by price, number of bedrooms, bathrooms, property type (including lots, condos, and homes).. Call our local Ruidoso real estate agents, and compare your home to sold homes in Ruidoso and to similar homes for sale in Ruidoso, New Mexico. Search our posts to get in touch with Ruidoso real estate and real estate agents.