I think every one knows about the tax advantage .
Another is a way to advance our investments and family spent time :working” as well as some r&r.
Thought occurred to me that if it was in a money making place away from home such as the coast for instance or a high tourist place to actually rent out that second home till you start another one . Any takers?
Tim
Replies
sorry tim you lost me on this one! i must be having a brain freeze. larry
hand me the chainsaw, i need to trim the casing just a hair.
Im suggesting that second home in a place that has second efforts to compliment the investment. Say I wanted to work in another place part of the time to make money . Say I wanted to get a return on the second home and rent it part of the time . Or for instance why not recreational property as such classified. If you had a real home thats what it would be unless it was on a ski slope or a beach or on a fly fishing river.
Tim
Well, the disadvantage is that it's not really your house at that point - it's a rental house that you get to stay in part of the time (14 days a year without loosing your deduction, IIRC). That means you can't make it quite as nice as you would if it was just yours. You will also pay somebody for management - getting renters, cleaning, etc.
But if that's okay, it can work well.
Exactly.
{Since we are in the trades}
We would enjoy the property as it was being built or built up which ever be the case. Even if we only had a camper there while we were building or remodeling it would still hbe r&r and partly vacation. But , if we chose location it could further benifit the whole cost. Most of the cabins I have stayed in were furnished and decorated . The personal stuff wasnt there is all.
Some of the stuff Im looking at would pay out renting it one weekend per month. But once it was done we could do it again and cash in . You did bring in good point that it really would not be a personal home that has your stuff in it but if it did you would be paying the complete bills. Theres no pay out and keep it that way.
Tim
Here ya go, thats what IM talking bout !
65463.5
Then read my following reply.
Tim
My longest standing friend (40 years) has recently started this. He built a new log cabin lodge in Tennesee and a company rents it out for him. In the process he got a second lot so he built a smaller one on it. It sold for a net of 75k before it was completed. He is looking for another lot now. He still has the lodge and it rents to people plus he and his family can use it as they wish. DanT
Tim, I've been doing that for several years now. Unfortunatly, I wouldn't classify my area as "high rent". We do get 2500 per week, but there aren't enough weeks in my neck of the woods to cashflow it.
When I hit the sunbelt, you can be sure I'll be searching for some year round resort property!
We probably spend more than 14 days a year at our investment property. We aren't ever enjoying it though, were just servicing it!
Wink, wink!
blue
tim you have a pretty good opportunity in your neck of the woods,we have place on beaver lake up by rogers.we rent it by the day/week and use it some. most places rent in the 225-300 per day, season from may until mid sept. a few days around war eagle then it's time to winterize. you have to be waterfront to rent well, but the appreciation factor is probably 3 times what it is here in wichita.
hand me the chainsaw, i need to trim the casing just a hair.
we rent it by the day
Careful Larry!
Renting by the day changes the nature of your business. Instead of investment income, your property become a business, as in "ordinary income". You know: hotel, motel, etc!
When the IRs determines that your investment income is business income, you lose all the advantages of real estate.
There are strict rules that govern this type of activity. The rules were implemented to reduce passive income writoffs. I think the IRS will require you to fill out average charts and then you'll be in a different type of income with different write off rules.
Check with a competent REAL ESTATE CPA.
blue