own 1 property or 2. Which is the bigger tax break?

Question

Is it better to buy 1 property at 900k and claim as a primary residence
Or buy 2 at a combined price of 900k and claim the second home as a business ?
Which is the best from a tax optimization perspective?

Answer 1

Interest paid on a primary residence mortgage is deductible, assuming your income is high enough to gain by it.

Investment property can be depreciated at 2.5% per year, which comes back at time of sale as a capital gain, unless you do a 1031 exchange. If the business is an income property, like a rental, then taxes and mortgage interested can be deducted, but they apply to the income generated by the property. Any remaining profit from the rent after all expenses becomes taxable income.

The right business property, therefore, can be better, since you are not allowed to depreciate your residence.

Answer 2

You can't claim a 2nd home as a business unless it actually IS a business, such as a rental property. Whether owning a rental property will "optimize" your tax position depends upon the numbers but it typically gives you a nice write-off due to the depreciation expense deduction. One caveat though -- that depreciation is recaptured when you sell. That can get expensive!

Answer 3

a million. installation the insulation and/or furnace ought to diminish your application costs by utilising sufficient so as which you finally save as much as (or better than) the cost of the contractor. You get the low value costs on your application costs and you get the tax ruin, so the full earnings ought to be better than the cost. 2. you're actually not donating it in basic terms for the tax ruin. you're donating it to get the tax ruin and help the charity. If the donation is $one thousand, and you come back $250 from the tax ruin, then it relatively in basic terms value you $750, however the charity have been given $one thousand, so the help to the charity is worth better than the cost to you. 3. you may desire to stay someplace. by utilising paying for a house, you're saving the money which you will possibly might desire to spend on hire in case you probably did no longer purchase a house. there is no longer something which will pay for itself from the tax ruin by myself, yet there are issues that pay for themselves from the tax ruin and the different reward (decrease application costs, assisting the charity, saving on hire, etc.) which you get.

Answer 4

You can get a tax break only on the 3rd property that you own.