If you’re one of the 7.3 million Americans who own a second home, you might only use it for a month or two each year. In many cases, owners spend less than 14 days per year in their vacation home, despite the year-round cost of owning, maintaining, and insuring the property. Fortunately, even if you don’t stay in your vacation home as often as you might like, there are various other ways to make good use of it. Instead of having your property sit unoccupied for the majority of the year, here’s how you can get the most out of your second home.
Get Away More Often
If you bought your vacation home to get away from the stress of your daily life, why not use it more often? Sometimes you just need a reminder to plan your next trip and to remember why you bought your second home. Is it near the beach or the mountains? If so, commit to spending one weekend away during the summer or ski season. If your vacation home is in a tourist hot spot, try visiting during the offseason for a completely different experience.
Share it with Family and Friends
For many people, spending a long weekend at your vacation home could be the highlight of their summer. A vacation home is a great way to bring people together and can help strengthen relationships with family and friends. Even if you’re not able to be there, sharing your second home with family and friends allows others to enjoy it.
To simplify sharing your second home with family and friends, Twimo allows your guests to privately book a stay online, and you can collect payments for cleaning, incidentals, or even a proportion of your annual expenses.
Donate a Stay for Charity
Another way you can share your property with others is through a charity or silent auction. If you want to support an organization, you can donate a stay at your second home, which can be privately booked and managed through Twimo. Though you won’t be able to claim any tax deduction, you can still enjoy the benefits of contributing to a meaningful cause without giving up an asset.
Swap Houses
You love the feeling of having a home away from home, which is probably one of the reasons you have a second home. House swapping is one of the most cost-effective ways to spend time in the comfort of someone else’s second home and live like a local. Instead of paying for short-term rentals (STRs) or hotels when you travel, you can exchange access to your vacation home whenever you’re not using it. This gives you the flexibility to travel where you want, when you want.
Generate Rental Income
Generating rental income from your second home doesn’t have to be a binary decision. Renting your home out year-round is a headache, but renting your home out on occasion can help generate enough income to cover the costs of homeowners association (HOA) fees, taxes, or other expenses, without sacrificing your ability to enjoy your home.
Mid-term renting (31 days or more per year) has caught on as a way to earn rental income without running into STR regulations. These leases can span a single month or a season (think ski leases). Twimo offers the tools you need to seamlessly communicate with both guests and contractors, send and receive payments, and manage and track expenses.
Turn It Into a Fractional Home
If you enjoy having a second home but the responsibility of sole ownership and maintenance is overwhelming, turning it into a fractional home might offer the best of both worlds. Fractional ownership can reduce your costs and responsibilities while still allowing you to enjoy the home for personal use or potentially earn some rental income. If you’re considering converting to fractional ownership, remember to weigh the challenges of fractional ownership against the benefits. These can include less flexibility, (potentially) not knowing the other owners, and shared decision-making responsibilities.
Can I Claim Tax Deductions?
If you rent out your vacation home for fewer than 15 days during the year, you’re not required to report any rental income and you can’t claim any rental expenses as tax deductions. However, if you rent out your home for 15 days or more during the year, you’re required to report your income and expenses on Form 1040.
In most cases, you can deduct mortgage interest (within IRS limits) whether you use your second home for yourself, as a rental property, or a combination of the two. If you both rent and use your second home personally (note that you can only have one second home for tax purposes), you may be able to claim some other deductions against your rental income, such as operating expenses and insurance premiums.
What To Do During Tax Season
When tax season hits and you want to claim any applicable deductions, you’ll need to know the proportion of days your home was rented out relative to how often it was designated for personal use. Here’s an example:
Say you spend the summer months (90 days) at your second home in the mountains. You also rent the home out for three months that winter (90 days), and rent it out to a family friend for another 30 days. In total, you generate $20,000 in rental income that year. When you file your taxes, you’ll report that you rented the home out for 120 days, used it for 90 days, and generated a total rental income of $20,000.
To report rental income and claim deductions on your tax returns, you’re responsible for keeping records of how much rental income you received and how much you spent on deductible expenses. There are several ways to prove the information on your tax returns is true, including receipts, checks, bills, and credit card statements. While the IRS might only ask for the numbers on your income and expenses when you file your return, they could ask you to produce specific documentation as proof when conducting an audit. If that does happen, you can rest easy knowing Twimo tracks all expenses associated with maintaining and renting your second home, so you can seamlessly file your taxes and claim any deductions.
Let Twimo Simplify How You Manage Your Second Home
Your second home has a lot to offer, from a place you can make memories with loved ones to a home you can share with friends, swap for stays elsewhere, rent out for income, or even use to support the charity of your choice.
Understanding your options can help you get the most out of your vacation rental home, and Twimo can help you seamlessly manage and service your second home no matter how you choose to use it.
