Second Home Ownership - Tax and Legal Considerations

Описание: Owning a second home or vacation home in the United States of America can be both very enjoyable and a smart investment; however, it also creates some serious tax and legal considerations, which we will start to draw your attention to in this introductory video.

1. Tax and Legal Considerations of Second Home Ownership
Navigating Usage, Liability, and Financial Implications in the USA

2. Usage & Tax Status - The "14-Day Rule" & Personal Use
Rental income is tax-free if rented for fewer than 15 days/year.
Excessive personal use reclassifies property as a residence, limiting loss deductions.

3. Mortgage Interest & Property Taxes
Mortgage interest deduction limited to $750k combined debt (primary + secondary).
State and local tax (SALT) deduction capped at $10k total, offering limited relief.

4. Sale & Profit Taxes - Capital Gains Implications
Second homes lack the automatic $250k/$500k exclusion applied to primary residences.
Must live in the home for 2 of 5 years before selling to qualify for exclusion.

5. Transferring Wealth - Estate Planning Challenges
Out-of-state property causes "ancillary probate," requiring two separate court processes.
Trusts or Family LLCs are used to avoid probate and manage multi-generational ownership.

6. Managing Risk - Liability & Asset Protection
Umbrella insurance is critical to protect personal assets from guest injury lawsuits.
Holding title in an LLC can isolate liability to the property itself, shielding other wealth.

7. Income Reporting - Rental Income & Passive Losses
Rental losses are "passive" and often cannot offset regular employment income.
High earners (MAGI greater than $150k) generally cannot deduct rental losses until the home is sold.

8. Zoning & Local Compliance
Municipalities may cap rental nights or require costly business permits.
HOAs can legally ban short-term rentals; deed restrictions must be reviewed pre-purchase.

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