Purchased a home in WI, not sure how to list it on tax return, as it's both a...

J

JRLZ

New member
...vacation home and rental...? We will be renting the property out, and also vacationing there in the summer.
What are the tax benefits/ramifications of each? Write off mortgage interest/taxes if second home VS write off furnishing home, losses, depreciation if rental? Long term...if we list it as a rental now, then will we have to pay capital gains on profit when we sell? Can you switch it from rental to vacation home later on? Thanks
Primary residence is in IL.
 
T

thetaxlady

New member
IRS publication 527.

Read it. If you don't quite get it, keep detailed records and hire someone to do the tax return.

When you sell, you have two issues. Gain from appreciation and gain from depreciation. Depreciation gain has to be paid back at your ordinary tax rates. Gain from appreciation is taxed at long term rates if you've owned it more than a year. This is true even if you stopped renting it.

The other issue is if it goes down in value. You can't take a loss on personal use property.
 
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