The weather is warming up. Your retired friends are coming back from Florida. Not only did they avoid the cold, but they also got a tax break. Right? In the context of this article, it’s important to differentiate between state income taxes and the tax considerations of owning a vacation property. This article is all about the latter. A future column will address the former.
Before we get into the meat of it, I’ll break the bad news: It is almost never a good financial move to buy a second home. With the advent of Vrbo, Airbnb and similar services, it’s almost always cheaper to rent than it is to buy. Remember, for purposes of this article, we are not factoring in state income taxes that could be saved if you buy a second home and meet residency requirements in a tax-friendly state. That said, below are three ways you can make the math more favorable.
