One of the factors you should consider when scouting for a second home or vacation rental is the tax regime of the hosting state. Tax laws will determine if the mortgage interest on the home is deductible, how much in property taxes you end up paying, and if you rent out the place, how much of your rental income you get to keep.
Fortunately for you, there are some states with very attractive tax regimes. Some of these states also house some of the best neighborhoods vacationers can stay in. Below are three of the best places to buy a vacation home in the United States if you are looking to reduce your tax bill:
Lake Tahoe, Nevada
Lake Tahoe is a favorite for discerning travelers and it attracts nearly 3 million vacationers every year. It has one of the best collections of tourist offerings around with world-class accommodation, dining, and entertainment facilities and services on offer. Tourists can hike the Sierra Nevada Mountains, take a boat ride in Lake Tahoe, go golfing in some of the best golf courses in Nevada, Kayak in Emerald Bay, get a tan at the free Kings Beach State Recreation Area, or take an aerial tour of Tahoe on a hot air balloon or helicopter.
Buying a vacation property in Lake Tahoe gives you a chance to take advantage of Nevada’s favorable tax laws. Nevada has zero income state tax and the property taxes are very low. Nevada’s effective state property taxes stand at only 0.96 percent. If you want to establish residence in Tahoe and are already doing some estate planning, you will also benefit from the fact that Nevada has no inheritance tax or estate tax.
Panama City Beach, Florida
Panama City Beach is the premier beach destination for travelers in Florida and the surrounding states. The beach is the main attraction and most tourist activities are water activities. Tourists can also visit the Pier Park which is a shopping, dining and entertainment complex and the 7D movie theatre at Ripley’s Believe It or Not! There’s also a small zoo off Front Beach Road called ZooWorld.
As far as taxes are concerned, Florida is one of the best states. Florida has no personal income tax. The corporate income tax is a flat 5.5 percent. As a resident, your beneficiaries will not incur any estate or inheritance taxes.
If you want a destination that also offers the best of the city life, Miami is the place to be. It goes without saying that you will also be enjoying the Florida tax benefits discussed above if you choose to stay in Miami.
Vacationers can have a great time at the beach, interact with a friendly and vibrant mix of people, experience Miami’s upbeat nightlife, and enjoy a range of cuisine from several open-air restaurants. Since Miami attracts tourists all year round, if you choose to rent out your vacation home, you can expect a good occupancy rate.
About Living Lake Tahoe
Alvin Steinberg is an experienced real estate agent based in Lake Tahoe, one of the nation’s best places to buy a vacation home. He has arranged for the sale and purchase of several properties in the area. With over four decades of experience in the local real estate market, he is one Tahoe’s most respected real estate professionals.