26 Jan What you can deduct for vacation home
Q. Is the $10,000 limit for everything or can I deduct up to an additional $10,000 for my vacation home which is not a rental?
A. The Tax Cuts and Jobs Act placed a limit on the combined amount of state and local income taxes plus property taxes that can be deducted beginning in 2018.
Specifically, your deductible total of these categories of taxes paid on Schedule A — itemized deductions — cannot exceed $10,000, said Cynthia Fusillo, a certified public accountant with Lassus Wherley in New Providence.
“In your case, the taxes on your non-rental vacation home get thrown into that initial and only $10,000 bucket,” she said.
Fusillo said In the event you convert this property to a rental sometime down the road, the associated property taxes move to Schedule E and become deductible in their own right, having nothing to do with the new limitation on Schedule A itemized taxes paid.
“Note though that rental properties follow a set of rules that govern and may limit the deductibility of expenses, so consult your tax advisor,” she said.
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This post was first published in January 2018.NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.