I had a question regarding the 10% down "Vacation/2nd home" loan. I was going to start a new thread, but I think I can sneak it in here!
From everything I've read, the IRS requires you to spend 14 days or 10% of the number of days it's rented to be considered a "second home" vs an "investment property." There are obviously tax implications to differentiating between the two...the biggest being that you can only deduct a portion of the depreciation on a "Second home" (based on how many days you, personally, spent in it the previous year).
Is everyone staying in their STR the 14 days/10% when they take out their 10% down/lower rate "second home" mortgage? Are folks doing this the first year to get the better "Second home" mortgage terms and then just converting it to an "investment" property the next year to reap full tax benefits? My reading seems to indicate the IRS couldn't care less if you call it a second home or investment property, as long as you claim the income if it's rented over 14 days...but your lender could go after you if you tell them you want a "second home" mortgage with full intent to use it as an "investment" property.
I'm not trying to be a negative Nancy I swear! Just trying to make sure I understand how this works before some bank is trying to come after me! Thanks!
https://www.fool.com/millionacres/taxes/second-home-vs-investment-property-comparing-tax-differences/
https://www.mortgageloan.com/mortgage-rules-differ-for-second-homes-vs-investment-properties
https://www.valuepenguin.com/mortgages/second-homes-vs-investment-properties
