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  • #31
    Interested in this thread.
    We have recently had interest in a lake/mountain property.
    As a W2 employed physician there seems like a lot of room for saving on taxes by showing a loss with your "vacation rental property" the drawback is you can only spend 2 weeks there a year i believe.

    Would be curious more as this is new to me. As an employed physician who purchases a vacation property with goal of only going 2 weeks a year and can afford the mortgage and costs without rental income, seems like a great opportunity to own a pice of property someplace nice, lower tax bill, and create long term wealth....

    Seems like a win to me. Besides the headache/hassle factor tell me what i'm missing....

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    • #32
      Originally posted by Otolith View Post
      Interested in this thread.
      We have recently had interest in a lake/mountain property.
      As a W2 employed physician there seems like a lot of room for saving on taxes by showing a loss with your "vacation rental property" the drawback is you can only spend 2 weeks there a year i believe.

      Would be curious more as this is new to me. As an employed physician who purchases a vacation property with goal of only going 2 weeks a year and can afford the mortgage and costs without rental income, seems like a great opportunity to own a pice of property someplace nice, lower tax bill, and create long term wealth....

      Seems like a win to me. Besides the headache/hassle factor tell me what i'm missing....
      Rental property losses are passive losses normally. The assumptions that is deductible is incorrect. Only deductible with specific conditions beyond the use you mentioned.
      https://www.google.com/amp/s/www.mil...ntal-property/
      More complex than assumed.

      Comment


      • #33
        Remember also as your kids get older their sports and social activities make weekend getaways tough. The window for 1-2 weekends per month away is pretty small. Of course after the kids have gone off to college I guess our calendar will open up again.

        Comment


        • #34
          Originally posted by VagabondMD View Post

          Yeah, I am sure MPMD will have a pithy and cogent statement which will be better than my bungling it, but this forum/community selects for the people who can afford to buy second homes (fancy cars, designer clothes, expensive jewelry and accessories, etc.) and choose NOT to do so. Perhaps a visit to the "Docs with Second Homes" forum will provide a different perspective.
          thank you for the vote of confidence.

          there is a big difference between a great suit and a second home.

          i can light the suit on fire in the backyard and it doesn't make a lick of difference to my financial life or plan.

          i agree with your statement that 2 homes is 1.5 too many. we just did a beachfront VRBO w/ a group of friends. no thanks on owning one. maybe it cashflows a little bit, great. but you have an endless chainof people who presumably occupy all points on the bell curve of human flourishing messing with your stuff. this house had all kinds of special instructions on how to clean their cookware and higher end appliances. if someone messes up your viking range then you are going to be trying to extract payment out of... the kind of person who messes up a rental stove.

          my in laws have a beautiful beach condo, initially they rented it and let a bunch of friends use it. then they stopped renting it, then they got away from even letting friends use it.

          "that's gonna be a no for me dog."

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          • #35
            i imagine that if i ever do short-term rental property i will look into prison decor, like metal toilets, shiny metal plates on the wall instead of mirrors, metal outdoor furniture in living room, taco-bell style dining set with bolted-down swivel chairs, etc. instead of intricate instructions on caring for the place, will just have a simple message posted on the door: “We hope you find our place attractive, but don’t want anyone getting stuck here: No magnets!” Will pay a cleaner for ten minutes of work hosing down the place between guests (metal walls and floor drains, of course). the location with view of the ocean or mountains will be what keeps people coming.

            one can dream.
            “. . . And the LORD spake, saying “First shalt thou take out the Holy 401k. Then shalt thou save to 20%, no more, no less. 20% shall be the number thou shalt save, and the number of the saving shall be 20%. 25% shalt thou not save, neither save thou 15%, excepting that thou then proceed to 20%. 30% is right out . . .””

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            • #36
              Originally posted by MPMD View Post

              thank you for the vote of confidence.

              there is a big difference between a great suit and a second home.

              i can light the suit on fire in the backyard and it doesn't make a lick of difference to my financial life or plan.

              i agree with your statement that 2 homes is 1.5 too many. we just did a beachfront VRBO w/ a group of friends. no thanks on owning one. maybe it cashflows a little bit, great. but you have an endless chainof people who presumably occupy all points on the bell curve of human flourishing messing with your stuff. this house had all kinds of special instructions on how to clean their cookware and higher end appliances. if someone messes up your viking range then you are going to be trying to extract payment out of... the kind of person who messes up a rental stove.

              my in laws have a beautiful beach condo, initially they rented it and let a bunch of friends use it. then they stopped renting it, then they got away from even letting friends use it.

              "that's gonna be a no for me dog."
              You did not let me down.

              I have a doc friend who owned a mountain ski resort condo. He purchased it primarily for use by his family but would occasionally let his friends use it. One friend, and a partner in his practice, accidentally left some water running in something (IIRC) and did $75,000 of damage (not covered by insurance). Yeah, I can see why letting friends use it may be worse than having strangers pay to use it.

              Comment


              • #37
                Originally posted by Otolith View Post
                Would be curious more as this is new to me. As an employed physician who purchases a vacation property with goal of only going 2 weeks a year and can afford the mortgage and costs without rental income, seems like a great opportunity to own a pice of property someplace nice, lower tax bill, and create long term wealth....
                You know what else creates long term wealth? Investing in a US total stock fund. If you look at even some of the places where houses have had some pretty crazy appreciation they have still lagged behind the total market but people don't equate the two the same. Saying you bought a house in 1992 for $150k that is worth $1.5M now doesn't quite hit the same as the person that bought $150k of S&P 500 stock in 1992 that is also worth $1.5M. Granted, rental properties can come with some income from rent but they also come with expenses which neither are associated with the S&P 500 but that's where you have some potential to maybe outdo the market...or not.

                Comment


                • #38
                  Originally posted by CordMcNally View Post

                  You know what else creates long term wealth? Investing in a US total stock fund. If you look at even some of the places where houses have had some pretty crazy appreciation they have still lagged behind the total market but people don't equate the two the same. Saying you bought a house in 1992 for $150k that is worth $1.5M now doesn't quite hit the same as the person that bought $150k of S&P 500 stock in 1992 that is also worth $1.5M. Granted, rental properties can come with some income from rent but they also come with expenses which neither are associated with the S&P 500 but that's where you have some potential to maybe outdo the market...or not.
                  Ten years ago I thought about buying a ski condo for ~ $200k, now it's worth $600k. Seems like a missed opportunity, til I realize that my $200k that I left in the stock market is now worth $800k.

                  Comment


                  • #39
                    Originally posted by FIREshrink View Post

                    Ten years ago I thought about buying a ski condo for ~ $200k, now it's worth $600k. Seems like a missed opportunity, til I realize that my $200k that I left in the stock market is now worth $800k.
                    Not quite an easy comparison unfortunately. There's 10 years of potential rent as well as potential tax benefits that you'd have to calculate as well, also any upkeep to work in there as well.

                    It is a lot of work compared to clicking buttons in the stock market though.

                    Comment


                    • #40
                      Originally posted by FIREshrink View Post

                      Ten years ago I thought about buying a ski condo for ~ $200k, now it's worth $600k. Seems like a missed opportunity, til I realize that my $200k that I left in the stock market is now worth $800k.
                      I would count it a major win if I had made $300k+ in rental income, reaped depreciation benefits and was also able to have enjoyed it a few times each year.

                      Comment


                      • #41
                        Originally posted by CordMcNally View Post
                        Granted, rental properties can come with some income from rent but they also come with expenses which neither are associated with the S&P 500 but that's where you have some potential to maybe outdo the market...or not.
                        Until recently my real estate and the stock market were rarely in sync like now with both rallying so I counted on the diversification aspect. It will be interesting to see how things play out this time around.

                        Comment


                        • #42
                          Originally posted by StateOfMyHead View Post

                          I would count it a major win if I had made $300k+ in rental income, reaped depreciation benefits and was also able to have enjoyed it a few times each year.
                          Not to mention it isn't $200k into $800k, its $40k into $680k with a remaining $120k on a fixed rate mortgage costing about $500 per month plus interest and taxes.

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                          • #43
                            Originally posted by StateOfMyHead View Post

                            I would count it a major win if I had made $300k+ in rental income, reaped depreciation benefits and was also able to have enjoyed it a few times each year.
                            Not intended to be a contest, simply pointing out that real estate has not really appreciated relative to the stock market over the last ten to forty years, if anything it has lost ground so there is no reason to cry over a so called missed opportunity.

                            Comment


                            • #44
                              Originally posted by Molar Mechanic View Post

                              Not to mention it isn't $200k into $800k, its $40k into $680k with a remaining $120k on a fixed rate mortgage costing about $500 per month plus interest and taxes.
                              I can lever equities just like I can lever real estate, in fact anyone with a mortgage and a stock mutual fund has done just that.

                              Also I own real estate (9 doors), not opposed to rentals. Just need to appraise it clearly, and conflating consumption and investment isn't off to a good start.

                              Comment


                              • #45
                                Originally posted by Tim View Post

                                Rental property losses are passive losses normally. The assumptions that is deductible is incorrect. Only deductible with specific conditions beyond the use you mentioned.
                                https://www.google.com/amp/s/www.mil...ntal-property/
                                More complex than assumed.
                                For airbnb/short term rental that you use less than 14 days I believe you don't need to be a real estate professional to get deductions...

                                Not arguing that purchasing vacation home as goal for short term rental is best way to build wealth...

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