Anyone thinking ahead about buying a second home in Northern California, renting it out most of the time, and perhaps someday retiring to the Sierra Nevada? Other Sonora retirees may also desire to turn their homes into Sonora rental properties. Northern California homes for rent in Tuolumne County help property owners by capitalizing on the great recreational destination and adding income.
All of these folks may be interested in the new property management services at Century 21 Wildwood in Twain Harte. We will walk you through the tax rules. Here’s a sampling:
- A Sonora home for rent can be leveraged if an owner uses the second home only 14 days a year or less.
- A second home is defined as an investment property if the owner occupies it only 10% of the total time that it is rented.
- The Internal Revenue Service considers rental real estate to be a passive activity unless property owners personally and actively maintain the house, advertise it, and find renters.
- As far as federal law, each owner is entitled to two weeks of rental income tax-free annually.
- If an owner finishes the year with a net profit from rental income, he/she may deduct all rental expenses. If there is a net loss, the deduction is limited by the passive activity rule.
For non-residents of California, the snowy mountains and temperate weather make Tuolumne County California an ideal location for owning second homes. Federal tax incentives for owning a second home in California is advantageous if the owners qualify as non-residents. It is important to follow the California rules to the letter on that point to avoid extra taxation.
If California considers any owner a nonresident, it will tax only the income derived from the owners California sources. Rental income on a Sonora house would be taxed, but not income from a primary occupation in another state. Nonetheless, non-residency must be proven. California also collects a transient occupancy tax for short-term rentals. All other income minus expenses is taxable.
Our Century 21 Wildwood Property Management Services enable homeowners to continue as passive landlords. We specialize in offering rental properties in the Sonora area–from Columbia to Jamestown to Twain Harte and Pinecrest Lake. Most of our rentals are long-term leases. We offer full service management beginning with determining the suitability of a property for rent and continuing all the way to maintain, working with renters, covering the legal basis, and providing profits and profit/loss accounting necessary for financial planners and tax professionals.
Contact Century 21 Wildwood for House Rentals/Property Management
Contact Century 21 Wildwood Properties, Inc. at 209-586-3258 or visit us at www.Century21Wildwood.com for helpful information about our Northern California home rental company including long-term rentals, second home rentals, cabin rentals, and horse property rentals in Tuolumne County. We also offer properties for sale.