I’ve put together some tips and tricks regarding buying a second home in San Diego, specifically some tax considerations you should talk over with your CPA if you’re thinking about buying a second home in the San Diego area.

  1. Mortgage interest deduction: Here in San Diego, you can write off the mortgage interest on your property for up to a million dollars. That can get you a great place near the beach, downtown, up in Carlsbad, or a ranch property somewhere in San Diego.
  2. Writing off your property taxes: You can write off all your property taxes without a limit. There is a caveat, however. If your annual income puts you in a tax bracket over $311,000, there are limits to how much you can write off, so make sure you talk with your CPA about how much of a write off you are allowed.
  3. Renting out your second property: Did you know you can rent out your San Diego property for up to 14 days and not pay any taxes on that income? That means your second property can become a source of tax-free income over holiday weekends like the Fourth of July, or over winter break when a lot the snowbirds are coming down to San Diego to catch some sunshine. It is possible to rent out your second property and have two or three months worth of your annual mortgage covered by the tax-free income from that 14 days of rental. It is important to remember that renting beyond 14 days a year makes that income taxable and can change the status of your second property to a rental property.
  4. You can shift your primary residence: When it comes time to sell, you may consider making your second home in San Diego your primary residence. In doing so, a married couple can avoid paying up to $500,000 in capital-gains taxes.
“It is possible to rent out your second property and have two to three months worth of your annual mortgage covered by the tax-free income from that 14 days of rental.”

If you’re considering making that purchase of a second home here in San Diego, these are some subjects that could save you a lot of money and that you should definitely talk to a CPA about. If you’d like to talk to me or have any questions, feel free to contact me at (858) 229-6063 or online at sean@mysddreamhome.com. I would be happy to help you!