Owning a second home is a luxury that many like to enjoy but it does not yield many tax deductions or credits. One of the few deductible expenses on a second home is the home interest tax deduction. You can also deduct your property taxes on both homes.

The limit on the amount that can be deductible is a home mortgage amount that does not exceed $1,000.000.00 on both your first and second homes combined.

In order to take any of these deductions, you must itemize. Make sure that your standard deduction is not higher than adding up all of your itemized deductions. This will help you get the most deductions possible and lower your tax bill.

Can I take the deduction if I rent out my second home?
You can take this deduction as long as you resided at the second property for at least 14 days of the year for personal use. If you do rent it out for a portion of the year, you must use the home for personal use for at least 10% of the amount of time that it was being rented out. If you do not qualify due to the amount of time you rented out the property then it will fall under business expenses. TurboTax Online offers many more tips for deductible expenses on your second home.

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Section 529

A Section 529 plan can help you prepare for the expense of paying for your child’s college tuition. The standard 529 plan allows you to prepay for college at the current rate for future use. This plan also allows the plan to be free from federal income tax. These plans are increasing in use as the price of college continues to increase annually. If this money is withdrawn for any other purpose than to pay for higher education, the funds will be taxed again.

Coverdell Education Savings Account

This is a type of savings account that will allow you to deposit up to $2,000.00 annually to save for college. Using this type of savings account will allow you to deposit this money and let it grow at a tax free rate. This plan also offers a tax penalty for withdraws for any other reason than higher education expenses.

College Tuition Tax Breaks

There are new tax breaks that allow you to deduct up to $4,000.00 of your college education expenses.

Qualified expenses include:

• Tution

• Books

• Course-related supplies

With the rising cost of college tuition, now is an important time to start saving for the future but if you are already paying for college and did not plan ahead then take full advantage of all the available deductions. These tax deductions are fairly simple to take and can put money back in your pocket.

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