How To Lower Property Taxes When You Buy A Vacation Home
When you buy a furnished home in the mountains, there's a good chance you're about to overpay on property taxes without even knowing it. The good news is that it's an easy thing to fix, as long as you handle it before you close.
The Furniture Hiding In Your Purchase Price
Most furnished homes in Red River and Angel Fire sell with everything inside, and that furniture often gets buried in the real estate price. It's not unusual to have $50,000 to $100,000 worth of furniture in a house. The catch is that furniture is personal property, not real estate. The county values and taxes real property, and those are two separate things. If the whole contract price gets treated as the real estate price, you could end up paying property taxes on a number that includes your couches and beds.
How To Separate The Furniture
The fix is simple. Separate the furniture from the real estate using a realistic value both sides can support. Around here, property taxes run roughly $700 to $900 per $100,000 of value, depending on your tax district. So if that furniture is properly separated from the real estate price, you could save roughly $350 to $450 a year.
A Bonus For Vacation Rentals
If you plan to use the home as a vacation rental, there's another benefit. Furniture and other personal property depreciate much faster than the building, in some cases immediately, which creates another nice tax savings.
Separating personal property the right way takes a little extra paperwork and a conversation with your accountant, but the savings add up year after year. Let's not pay property taxes on furniture.
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Have questions or want to learn more? Give us a call at 575-613-4243. We're happy to help.
Rob Swan | Qualifying Broker | Swan Realty Inc.
