Without loan interest etc you are still eligible to deduct the real estate taxes each year if you do end up itemizing in the future. Keep in mind the current cap is $10,000 for the itemized deduction for taxes (ie. state, real estate & sales tax). Also, keep track of eligible improvements which can add to the cost basis if you sell the property in the future.
- The adjusted basis is essentially what you've invested in the vacation home - the original cost plus the cost of capital improvements you've made.
- Capital improvements add value to your vacation home, prolong its life, or give it a new or different use.
- They don't include expenses for routine maintenance and minor repairs, such as painting.
- Examples of improvements are a new roof, a remodeled kitchen, a swimming pool, or central air conditioning.
Have an amazing day. Evelyn M (CPA 20+ years)
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