"Can I claim property taxes on my vacation home?" is likely one of the first questions you’ll be asking yourself if you're thinking about buying a vacation home. The answer will vary depending on the property's location and your own tax jurisdiction.*
That’s why we've broken down what you need to know about property taxes and claiming them on your vacation home.
*While we're dedicated to helping vacation homeowners, we aren’t an accounting source. We’ve outlined the best and most widely-applicable information on property tax for vacation homes here for your convenience.
However, we strongly advise you to do further research and reach out to your accountant with any further questions about claiming property tax and other tax deductions on your vacation home.
So with the above caveat in mind, here’s what you need to know about property taxes and claiming them on your vacation home.
What Is Property Tax?
Property tax is a regressive, ad-valorem tax paid on a property owned by an individual or corporation. The money you pay as a homeowner in property tax helps fund important local systems and amenities such as roadways, running water, street cleaning and sewer operation.
Property tax is levied both on the building you own - for example, a home or warehouse - and on any surrounding land also under your ownership.
This tax type varies by state in the US where the property tax is generally considered high compared to many European countries. When buying a vacation home or any kind of second property, it’s always advisable to research the property tax regulations and guidelines locally.
Property tax is calculated based on the property's value, it is not affected by the owner's level of income.
Your Vacation Home & Property Tax
Generally, you can reduce your tax bill by deducting expenses you incur when your rent out your property when you aren’t using it yourself. However, you can only do this if you use the property yourself for less than 14 days in any given year, depending on your location.
Time spent carrying out repairs and maintenance to your vacation home, checking in on it, or preparing it for guests who have rented it, doesn’t count as ‘personal use’ of the property as this is considered upkeep time.
Other Deductions To Know About
If you’re renting out your vacation home, there are many other costs that can be deducted from your tax bill. The main areas include:
- Rental expenses
- Insurance costs
- Property manager fees
- Insurance costs
- Mortgage interests
- Property deprecation
Whether you’re considering investing in a second property close to home or another country - such as Bermuda - there are more than just tax benefits.
For example, purchasing a condo in a condo hotel means you have access to amenities, you don’t have to worry about maintenance, and so much more. Bermudiana Beach, Tapestry Collection by Hilton is Bermuda’s latest condo hotel project and is a great example of such a place.
Your Home Away From Home...
Generally, with vacation homes, you take care of rental marketing, check in, housekeeping and repairs yourself. At Bermudiana Beach, Hilton and a professional on-site management team take care of these for you. That way, you can rest easy knowing your vacation home is in good hands.
So now you can own your own ‘home away from home’ without lifting a finger. You can enjoy another culture and way of life. And frequent and unforgettable vacations each year. Best of all, when you are not there, your vacation home will be earning rental income for you.
Bermudiana Beach Resort helps you achieve all of this and more. Find out all you need to know about why this luxury resort is the perfect fit for you with our helpful infographic below.