So here's the first question: I'm being told that I will have to get an investment home type loan. If I buy a second home and pay the mortgage payments do I consider this an Investment home??===============>>it depends not really; what I mean is that People sometimes use the terms ?investment property? and ?second home? interchangeably to describe real property that is not their primary residence, but there are some very distinct differences between these types of properties. An investment property is a property that isnot your primary residence, and is purchased or used in order to generate income, profit from appreciation, or to take advantage of certain tax benefits.
Basically, if you purchase real estate that will be used to make a profit, rather than used as a personal residence for you and your family, that property is considered to be investment property. A second home is a residence that you intend to occupy in addition to a primary residence for part of the year. Typically, a second home is used as a vacation home, though it could also be a property that you visit on a regular basis, such as a condo in a city where you frequently conduct business.
Often, to qualify for a second-home loan, the property must be located in a resort or vacation area (such as the mountains or near the ocean) or a certain distance from the borrower's primary residence.Second-home loans regularly have a lower interest rate than investment property loans and will usually include a Second Home Rider along with the mortgage. This rider usually states thatthe borrower will occupy and only use the property as the borrower's second home;that the property will be kept available for the borrower?s exclusive use and enjoyment at all times;the property cannot be subject to any timesharing arrangement or rental pool, and the property cannot be subject to any agreements that require the borrower to rent the property or give a management firm (or any other person) control over the occupancy and use of the property
I'm sort of confused on my options. If I'm not making any money off of it does that hurt me?=======> If you have a loss from your rental real estate activity, two sets of rules may limit the amount of loss you can deduct. You must consider these rules in the order shown below.
At-risk rules. These rules are applied first if there is investment in your rental real estate activity for which you are not at risk. This applies only if the real property was placed in service after 1986. Passive activity limits. Generally, rental real estate activities are considered passive activities and losses are not deductible unless you have income from other passive activities to offset them. However, there are exceptions; In most cases, all rental real estate activities except those of certain real estate professionalsare passive activities. For this purpose, a rental activity is an activity from which you receive income mainly for the use of tangible property, rather than for services.
Is there a smarter way of going about it? I am reading that if it's an investment property and I don't make $ it will not be good on my taxes, as well as possibly make my current home property tax go up? ==.No your pty tax has nothing to do with yur rental loss;as said aslognas you take rental losses, as mentioned above, you may claim the losses on your return so that you can reduce your tax aliblity.
Can I not just buy a second home for myself and let my parents live in it?=====.you may do that if you want.
I am fully expecting to have several weekends a year that I stay over there so I am not sure what the requirements are for an owner to have to actually "live" there. Would this be better tax-wise? Also possibly worth noting is we all live in the Kansas City metro, but I live on the KS side and the house I will purchase for my parents will be on the MO side.=======>I guess the best way for you os to contact an Enrolled Agent or a CPA doing taxes in your lcoal area for your federal and state taxes for more information.