Despitethe atrocious housing market over the past several years, the vast majority of Americans own real estate, with about 65.5% owning their own homes. (Tax write-offs for your main home are discussed in Chapter 4.) But owning a principal residence isn't the only way to invest in real estate. Many individuals also own second homes or invest in rental properties to generate income.
This chapter explains:
For more information, see IRS Publication 527, Residential Rental Property (Including Rental of Vacation Homes); IRS Publication 587, Business Use of Your Home (Including Use by Day-Care Providers); and IRS Publication 946, How to Depreciate Property.
The rich have traditionally maintained more than 1 residence, summering in Newport, skiing in Aspen, escaping winters in Miami. But today, second homes aren't limited to the very rich; they are increasingly common among an ever-broadening populace. The tax law offers some tax breaks that help to make ownership of vacation homes more affordable.