How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Lev Your Own Question
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28081
Experience:  Taxes, Immigration, Labor Relations
Type Your Tax Question Here...
Lev is online now
A new question is answered every 9 seconds

We currently own a home in Virginia which is our primary residence.

Customer Question

We currently own a home in Virginia which is our primary residence. We just bought a home in Ohio which needs substantial renovation. We plan to move there full time sometime in the next three years. Would it be advisable to rent it once it is renovated or would we be better off tax wise keeping it as a second home? If we decide to rent, can we deduct the renovation expenses while it is vacant?
Submitted: 4 years ago.
Category: Tax
Expert:  Richard replied 4 years ago.

Good evening. If you keep it as a second home, you can only deduct the interest (limited up to a $1,000,000 in mortgage loans between both houses) and the property taxes. Plus you have no revenue. If you rent it, you can deduct all the expenses, such as insurance, repairs, etc. You can also depreciate it. And, you have revenue, which is taxed. The renovation expenses would not be deductible, but would become part of the depreciable basis of the property. The expenses would not be deductible until you had completed the renovations and held the property up for rent.



I hope this has given you information that has been helpful to you. I wish you the best of luck!


If you have a follow-up question, please remember that there might be a delay between your follow up questions and my answers because I may be helping others or taking a break.


If I have adequately answered your question, even though the answer might not have been the one for which you hoped, I would appreciate it if you would please click the GREEN ACCEPT button so that I receive credit for my work; otherwise, though you have made a deposit, I do not receive credit.


If you need additional clarification on this question after clicking ACCEPT, please do not hesitate to click Reply and I will be happy to do what I can to help you further. Thanks for allowing me to be of service to you.


Please be aware that the information provided here is not legal advice. Rather it is simply general information. All states have intricacies in their laws and any information given is simply information only and specifically is not intended to be, nor does it constitute, legal advice. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.

Customer: replied 4 years ago.
Maybe I need to provide more information so I can make a calculation. The mortgage , taxes and insurance run about $550 a month. Not a lot but I don't think it could be rented for any more than $1000 a month, making the positive cash flow about $400 a month not counting other expenses and probably a property manager since we live out of state. We gross $195000 a year and our major deduction is interest on our residence, $25,000 per year.

What I am trying to determine is whether the tax benefit from renting outweighs that of calling it a second home would be worth the problems involved in being a distant landlord.

I don't need exact figures, just a ballpark idea of the benefits of both options.
Expert:  Lev replied 4 years ago.
Hi and welcome to Just Answer!

There is no "tax benefits" from renting. Your benefits are rental income.
If your expected rental income $1000 a month * 12 = $12,000
Your rental expenses are mortgage interest, real estate taxes and insurance $550 a month * 12 = $6,600
Please be aware that only mortgage interest is deducted - not part of the payment attributable to principal. The cost of rental property is recovered via depreciation. Residential rental property is depreciated over 27.5 years. That means if your cost basis is $100,000 - you will deduct depreciation $100,000 / 27.5 = $3636.
The drawback is that depreciation will be recaptured and added to your income when you sell the property.
Additional overhead of keeping record and tax preparation will be ~$100-$200
If you hire a property manager - it might cost ~10-25% of your gross receipts - and will cost at least $1200 per year.
Seems as you will have losses from rental activity and that will be passive activity - so such losses may be deducted only against your other passive income or will be carried forward and will be deducted when eventually you sell the property.
Thus - most likely rental activity will not affect your current tax liability - but will provide the positive cash flow to cover ongoing expenses.

If you plan to convert a rental property into your personal property - you would need to live in that property at least five years to exclude capital gain (not two years) - so that might be additional disadvantage in future, but if you plan to live there at least five years - than there will not be any difference for you.

Let me know if you need any help or clarification.
I will adjust your estimations if you provide more précised amounts.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Previous | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA

Meet The Experts:

  • Wallstreet Esq.

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    10 years experience
< Last | Next >
  • Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    10 years experience
  • Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • Richard's Avatar


    Tax Attorney

    Satisfied Customers:

    29 years of experience as a tax, real estate, and business attorney.
  • Robin D.'s Avatar

    Robin D.

    Senior Tax Advisor 4

    Satisfied Customers:

    15years with H & R Block. Divisional leader, Instructor
  • Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
  • jgordosea's Avatar


    Enrolled Agent

    Satisfied Customers:

    I've prepared all types of taxes since 1987.
  • R. Klein, EA's Avatar

    R. Klein, EA

    Enrolled Agent

    Satisfied Customers:

    Over 20 Years experience