What Defines a Second Home?

This is a followup question from an earlier post. I'll summarize my situation really quickly:

- Purchased another home in the same town as my primary residence for the purposes of renovating and reselling.

- Plan to sell it after a year's time of ownership.

- Proceeds from an equity loan on primary residence paid for the other house.

- The other house has neither been offered for sale or rent during the period of ownership. It has been unoccupied during this period.

- Current filing status is as an individual (i.e., not a business or other entity). Anyway, from some discussions, there seems to be two camps on how this should be handled. 1) This is a "second home" and I can deduct interest and taxes on Schedule A. Capital improvements to be added to the basis. And 2) This is an investment. An election shoud be made to capitalize interest, taxes and other expenses. All capitalized expenses are added to the basis. So, any opinions on where my situation falls? Second home? Investment property? If it's an investment property, how do I "capitalize expenses"? Is that something only a CPA would do? Hopefully someone will have some foresight/experience with something like this, otherwise I may just have to run the numbers for both cases and see which one looks better.

Thanks, dc

> > >
Reply to
dc
Loading thread data ...

Since your stated intent is to "renovate and resell," this is neither a "second home" NOR an "investment property." Rather, it is an "ordinary income" property held for sale in the ordinary course of business. MTW

Reply to
MTW

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.