Seven Tax Tips for Vacation Rental Owners

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This is the time of year when everyone starts thinking about tax preparation. If you own a vacation home and rent it out, you have likely benefitted from a strong vacation rental market this year. That’s a good thing! But you also want to take advantage of all the tax laws that will help you make the most of your investment.

In addition to the benefits of having a getaway to use at your leisure and the income that can come from renting your property, you have some great tax benefits to consider. We’ll outline a few we’ve regularly come across but note: DO talk to a tax professional as the following information may or may not apply to you.

Tax Tip #1: You may have a getaway, but you can’t get away from Uncle Sam

Be prepared to keep the IRS happy and prove that you use the home you rent out. You’re considered to use a dwelling as a residence if you use it for personal purposes during the tax year for at least:

  1. 14 days, or
  2. 10% of the total days you rent it to others at a fair rental price.

Tax Tip #2: You may be able to deduct mortgage interest

Have you set up your vacation rental home as a business? If so, you can most likely deduct the interest you’ve paid on the rental property. You should receive a Form 1098 from your mortgage lender showing you the interest you paid for the year. When you file the tax return, take the deduction on IRS Schedule E, which is for residential rental property owners.

  • According to NerdWallet, you may deduct the interest you pay on mortgage debt up to $750,000 ($375,000 if married filing separately) on your primary home and a second home.

Tax Tip #3: You may be able to claim depreciation

Think of your vacation home as a business asset instead of an investment, and you may find you’re able to claim its depreciation on your taxes. This will only be true if the home is worth less each year and is not gaining value. The math is complex, so call in a tax pro if you think you might be able to take advantage of this benefit.

Tax Tip #4: Property tax deduction: for you?

Property tax, which is calculated based on location and valuation, is often overlooked as a tax deduction. There are limits as to what you can claim, however that limit does not apply to business activities. Be sure you speak to a CPA about the best way to take advantage of this option.

Tax Tip #5: Repairs that are deductible

When you rent out your home, things tend to break more often. Generally speaking, you can consider some things tax deductible. For example, the cost of fixing appliances, patching holes in the wall, and even changing light bulbs. Again – check with your CPA for clear delineation of what is deductible for you because sometimes the cost isn’t deductible. Instead, it gets capitalized and could become part of your basis (typically what you paid for the house).

Here are a few big examples of things the IRS says usually have to be capitalized. You can see more in IRS Publication 527.

  • Additions
  • Landscaping and sprinkler systems
  • Storm windows
  • New roofs
  • Security systems
  • Heating and A/C systems
  • Water heaters
  • Flooring
  • Insulation

Tax Tip #6: Uncovering more expenses

Ask your accountant about whether the following expenses will apply to you:

  • Transportation expenses associated with collecting rent, managing your rental or maintaining it.
  • Advertising your rental
  • Insurance on your rental
  • Utilities

In general, you cannot deduct the cost of travel between your home and the rental property. Nor can you deduct any income that is lost if the home is not rented out.

Tax Tip #7: Rental agencies streamline the work

Using a rental management firm offers you so much more than simply getting more eyeballs on your property and managing the entire rental process. It also makes all the financial aspects of the rental side of ownership much easier. For example, we handle utility, cleaning and repair payments, along with any HOA fees (if required).

What Sea Scape can do for you

Sea Scape Properties collects all rental payments and provides our clients with detailed monthly statements. Homeowners will always have instant access to insights on revenue, expenses, and reservations. We collect and submit the occupancy taxes on your behalf and provide a detailed year-end 1099 statement to make filing taxes quick and easy.

That’s our goal: making your rental property as profitable and easy as possible. Let us know how we can help you this year! Contact us today at 910-332-7284 or email to [email protected].

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Southern Magnolia Concierge Service – Enhance Your Vacation

Are you looking forward to your upcoming vacation but still stressing over all the little details for your stay such as getting groceries, booking tee times, making dinner reservations, or decorating for a special occasion? If so, we encourage you to use our exclusive partner, Southern Magnolia Concierge. Their team of experienced staff can do all of the above and more. Making your time at our Sea Scape property stress-free and more memorable is their goal!

Southern Magnolia Concierge is a boutique concierge firm serving Wilmington, NC and the surrounding areas. Their job is to make your life simpler by saving you time. As a resident of Wilmington, NC for the past twenty years, Southern Magnolia Concierge’s owner, Grace has extensive knowledge of the area. She and her team will ensure your needs and preferences are met with exceptional service and attention to detail. They understand the value of your time and strive to make your life simpler. This allows you to enjoy all that our North Carolina area beaches have to offer.

Stress-free Grocery Pickup and Set-up

Imagine arriving at your Sea Scape property to find the pantry stocked with your favorite snacks and the fridge filled with fresh groceries. With Southern Magnolia Concierge’s grocery pickup and set-up service, this convenience becomes a reality. Say goodbye to time-consuming supermarket visits and let their team handle it all. Simply provide them with your grocery list, including any butcher shop and ABC store requests and they will take care of the rest. Making sure everything is perfectly set up for your arrival. Start your vacation off on the right foot with a hassle-free and fully stocked kitchen!

Seamless Reservations

Looking to book a tee time, spa service or dinner out? Southern Magnolia Concierge can assist with booking any reservations you may want during your stay in our beautiful coastal town. Their knowledgeable team has access to exclusive connections and local expertise to make your reservations a breeze. They will handle all the details, leaving you free to relax and enjoy your vacation time. 

Culinary Delights with Chef Services

Large group or small, if you would prefer to eat in, Southern Magnolia Concierge can assist with booking chef services during your stay.  This allows you to enjoy your Sea Scape rental even more! From intimate dinners to special celebrations, culinary experts will curate a customized menu based on your preferences and dietary requirements. Sit back, savor exquisite dishes, and create cherished memories as you enjoy a delicious meal created just for you at one of our beautiful properties. 

Elevate Special Occasions

Celebrating a special occasion during your stay? If so, why not make it more memorable by having Southern Magnolia Concierge do the decorating for you? They bring all the supplies and save you time by setting everything up. Also, if you’re traveling light or by plane and don’t have room to pack gifts, their team can run personal errands too! They can pickup a preferred gift or prepare custom gift baskets for any occasion. Need something sweet for the occasion? There are several dessert shops to choose from and their team is happy to deliver right to your doorstep. 

Customized Services Tailored to You

Southern Magnolia Concierge understands every guest has unique needs and preferences. That’s why they offer a range of additional services tailored to your requirements. Need transportation arrangements? Seeking childcare services/gear? Craving an in-home spa treatment? They have you covered. Let them know your desires, and their dedicated team will make it happen. 

In short, we want your time at Sea Scape Properties to be the most memorable vacation for you and your family. Time seems to go by faster when you’re on vacation so let Southern Magnolia Concierge take some items off your plate so you can spend more time relaxing on the beach. Visit their website  to schedule services. And, when you stay with Sea Scape, you get special discounts from Southern Magnolia Concierge.

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