How can you pay fewer taxes on your second house?
This is a valid question, as sometimes having a second residence can be a real tax burden. It can also make it hard to live with.
It can be difficult to maintain a second home, especially in times of generalized economic problems. Sometimes, you may not even want to buy a second house. However, an inheritance can result in a second property.
Keep in mind that you must incur expenses to maintain your property. This money could be used for something else.
House taxes are more expensive, particularly if you have a second house.
What taxes do you pay on your second home?
Answering the question, “How can I pay fewer taxes on my second home?” First, you must be familiar with the taxes that are payable on second properties, such as houses by the sea of houses that will be used for vacation purposes. And What Is Considered A Second Home For Tax Purposes?
If you’re wondering how to reduce tax on your second home, remember that you pay different taxes for the second owner.
For example, taxes are charged on the purchase of a second property. These taxes mainly consist of the registration tax at 9% on cadastral values.
The VAT for the second home must be added to the purchase.
If you purchase from a building development that is subject to VAT, then you will need to calculate 10% VAT. This can increase to 22% if you are purchasing a luxury property.
This must be added to the purchase $200 mortgage tax and $200 cadastral taxes.
All of this includes the payment of taxes based on the cadastral Income, which is indicated on tax returns.
The heading for the second home of a relative
You can make the property register to a relative, or to a friend who doesn’t already own a property. This will allow you to pay fewer taxes on your second home.
This will ensure that both you and your relative have the first home and save money.
You must choose someone of great trust to inherit all rights to the house.
Can you fake separation?
One person believes that faking a separation of the spouses is another way to get fewer taxes on your second home. This allows you to register one house for the husband and one for the wife.
This is a real illegal act. It is simply simulating a marital breakup. If both spouses continue living together, they may commit a serious scam.
Make a portion of your house uninhabitable
However, there are always limits to legality. For example, the owner may try to alter the properties of the Cadastre house to reduce taxes. He/she might transform it into a collaborating unit.
This is a declaration that a portion of the house declares it to be uninhabitable.
This measure can also fall into illegality. It could also prove difficult to implement because the re-registration for the house is not so easy considering the municipal regulations.
True, if a portion of the house is not habitable, the owner will have less square footage. In this case, taxes are subject to a lower.
You must remember that you cannot fall for the scam by leaving a portion of your house uninhabitable without electricity, water, or gas utilities.
Rent of a second home
Another option is renting it. This will allow you to reduce your tax bill on your second property.
If you rent a second house, you may be able to count in a monthly income. This allows you to recover money and thus to save financially.
Rent a second home. We recommend that you pay the agreed rent. This means that the second home must be in a densely populated area. This will result in a 30% reduction in the rental income.
If the property falls under the historical or artistic interest category, you can get a greater reduction and a discount.
Demolition of the second house
There is also another option, but it is very radical and should be considered individually. It’s about the demolition of the second home and paying fewer taxes.
Is it worth demolishing the house to avoid a heavy tax burden? As we have said, everything can change from one situation to the next.
It can be used if you inherit a house that is a decrepit building that needs extensive renovation.
A lot of renovation, especially when it’s very radical, can be expensive. In some cases, it may be more cost-effective to demolish the property.
Check more articles here.