Tax Implications of Owning a Second Home

A second home is a valuable investment that can enrich you and your family's lives as well as your annual tax situation. The IRS offers potentially lucrative second home and investment property tax deductions that can augment homeowners’ savings and offset purchase and interest expenses.

Tax Benefits of Owning a Home

Property Tax Deductions. Although Texas doesn’t impose property taxes on a state level, each county has its own regulations. You can find the taxes for Palo Pinto County, where Ranger Ridge is located, here. Texas actually has a fairly robust collection of property tax breaks for property owners, from the basic homestead exemption to a variety of exemptions for senior citizens, people with disabilities, veterans and surviving spouses of first responders. You should research your options and consider consulting with a tax preparer experienced with Texas state and federal taxes to find out if you qualify.

Capital Gains Exclusion. Whether you can make use of the Section 121 capital gains tax deduction when you sell property depends on your eligibility. For example, you need to have lived in your second home for at least two of the five years prior to its sale. These rules aren’t necessarily as strict as you might assume, as you don’t need to have lived in the home concurrently for two years or the most recent two years.

Mortgage Interest Deductions. While mortgage interest deductions are typically utilized to help make owning a home a more affordable prospect for many families, they can also save you money on your second home. By itemizing the deduction, you can reduce interest on mortgage debt up to $750,000 if you’re married and filing jointly. The limit is $375,000 if you’re filing separately.

Rental Income. A second home can potentially become a source of passive income if purchasers decide to rent it out, which can help offset the upfront purchase price and generate revenue.

Investment property owners might also be able to write off expenses related to their rental business, including advertising, cleaning, maintenance fees, repairs, insurance premiums and property depreciation. However, there are strict eligibility rules for these write-offs. 

Why Owning a Second Home Is a Valuable Investment

More than a worthwhile tax investment, a second home can provide you and your family with a place to retreat from the world and create lasting memories. At Ranger Ridge, our luxury home community gives homeowners access to country club-style amenities and a diverse variety of outdoor experiences. Whether your family enjoys hiking, horseback riding, hunting or fishing, you’ll find years of meaningful enjoyment in our pristine nature preserve.

Ranger Ridge offers a unique opportunity to enjoy the luxuries of a customized home with direct access to our state’s natural beauty. We’ve partnered with some of the most renowned builders in Texas to provide a variety of new home design options to choose from and are happy to help prospective residents customize their home plans to fit their vision.

Homeowners can also customize their membership to match their personal preferences. Whether you are a long-time fisher interested in spending days near our many stocked and managed ponds and streams, a horseback rider ready to explore more than 30 miles of riding trails or a hunter looking for exotic hunting opportunities that don’t require expensive trips across the Atlantic, Ranger Ridge has a membership option for you.

Build Your Second Home Within a Family and Nature-Oriented Community

Boasting 800 acres of home sites and 1,800 acres of untouched Texas scenery, Ranger Ridge offers stunning views tucked away from the noise and congestion of the city. Our experienced custom home designers and builders will construct your dream home surrounded by creeks, hiking trails and panoramic vistas of the Palo Pinto Mountains.

Ranger Ridge isn’t just an investment opportunity, it’s a chance for your whole family to connect with nature and the uniquely beautiful landscapes of central Texas. Schedule a tour today by calling (817) 618-6773 or by completing our request form.