Most of us are in the thick of  preparing our 2007 taxes, so I wanted to spend some time this week covering issues related to paying taxes on vacation homes.  Many homeowners in Alabama also own vacation or investment properties – but can these homes truly be claimed as vacation properties?


This article from answers this and other important questions, such as:

  • When and under what circumstances do I have to pay taxes on rental income?
  • What sort of deductions can owners of rental properties take?
  • If my vacation home is considered a secondary home (not a rental home), what deductions can I take?

 Once you have determined which category your property qualifies as, the chart below gives you a quick overview of what you should expect during tax season:


Vacation-Home Category

Rental Income




not taxed

not available besides mortgage interest and property taxes

no tax benefit




may possibly report a loss if mortgage interest and property taxes exceed rental income; but can't carry the loss forward or backward to apply to another tax year.




can carry losses forward, or back


Other helpful links on this topic:

To learn more about Montgomery AL real estate, please call me at 800-HAT-LADY or visit  Or, visit to learn more about owning a Montgomery AL vacation home.