Tom Hinz http://www.shortsaletosell.com
I am not an accountant, but I do live on the water and own investment property so I understand first-hand your line of thinking.
My husband was a CPA prior to going into law enforcement. After consulting with him, as well as the mortgage expert in my office, here's the info I'd like to share with you:
1. A general rule of thumb is that a mortgage on a "primary" residence is almost always going to be viewed most favorably tax-wise by the IRS. A "second home" (near water, mountains or some other recognizable attraction) or "vacation residence" has the 2nd best tax benefit. An investment property has the 3rd best tax benefit.
2. Many mortgage companies view a second home in a fashion similar to a primary residence. Therefore, you may be able to garner a more attractive and lower interest rate for either of those types of properties vs. a total "investment property" (which would very likely be have a mortgage with a higher rate).
3. If you have substantial equity in your primary home and take out a 2nd mortgage on your home to help you purchase a vacation home, you may not get a double-tax benefit, because "Uncle Sam" won't necessarily allow it.
4. A second home that you can also rent out on occasion to supplement what it costs to carry and maintain the house can be a lucrative investment in the longrun (especially if it's near water). However, if it's also used an "investment property" depreciation will likely come into play when it comes time for your accountant to do your annual taxes.
If you already utilize a certified public accountant, then it's good to look to them for specific advice and counsel.
If you have additional questions, want to get a second opinion or would like to speak directly to mortgage and tax professionals, let me know. I would be happy to connect you directly with an experienced senior loan officer and a CPA (other than my husband).
Should you have interest in any waterfront homes please go to http://www.AmberNobleSellsHomes.com and view a beautiful one I have listed offering unparalleled 180 degree water views.
All the best,
Weichert, Realtors (Marlboro office)
455 Route 9 South
Manalapan, NJ 07726
917-723-5645 - cell
732-536-4400, ext 199 - office
"Thank you for the referrals of your family, friends and colleagues. It is the highest compliment you could ever pay me."
If you should decide to declare rental income from the shore home the property would then be considered an investment and you would be able to write off expenses and take a depreciation expense on your tax return
You can also write off the costs and depreciation on an income property but there are limits as to how much you can use it and still write off some expenses, I believe. I'd consult both my accountant and my financial advisor as to where your money should be best invested for maximum yield.
Enjoy your summers at the shore!
Since my experience for 22 years is strictly marketing and selling shore homes, I can definately assist you in locating your investment. As far as a tax decision, that should be answered only by your tax accountant, since that is thier expertise and should be up to date on the latest tax law. So please contact your tax accountant. If you do not have one, get one. Or contact me and I can recomment a few to you. Check out my website and feel free to search for a shore home. When you decide what your account advises you to do, please do not hesitate to contact me, my contact information is in the link below or click on my name. Good luck to you. Looking forward to hearing from you soon while these interest rates are so low!
Depending on your rental and income you could write off a lot more...
I generate about 32K in rental income from my place in North Wildwood. I write off my tolls to and from. Maint, supplies, depreciation,Cleaning, grass cutting,insurance, interest, taxes, mileage, supplies, advertising... But again I report all my rental income...