Financial/Tax Question

[Nativewoman]

We are planning on selling our home and receive a nice some from that sale. We want to buy almost 3 acres that has a small manufactured home on it. We want to move our daughter into it, subdivide the property (I have already checked into this) and then move a manufactured home on one of the parsels for myself and husband. Would this be considered a second home? Will this affect our income taxes in some way. Thank you so much

[David Oxhandler]

If you have two homes I would guess that one would be considered your primary residence and the other a second home or investment property. You should talk to whoever helps you with your annual tax returns for the best tax strategies available to you as this may differ from state to state.

[Nativewoman]

Thank you so much. We just remembered that the little manufactured home is not on a perm foundation so it it considered personal property. And I received a call from a lawyer and we do not have to subdivide with that situation. So I guess we are good to go to move forward. Thanks again.

[rmurray]

An attorney should know the facts when he speaks...but I have found the best place to get info on land regulations is from your local building office...

[AZRealtor]

To answer your question more directly, it will not likely be considered a "second home" with regard to your income taxes. Since the 2 homes are right next to each other, it probably wouldn't qualify for any benefit as a "2nd home". However, as an investment property (rental), you should be able to write off many improvements, depreciate the overall investment, and recognize other tax benefits while providing your daughter with a home.
I'm not sure why the lack of a permanent foundation would mean that you shouldn't look at the minor land division. Usually, if you can do the land division, it creates more value by having 2 pieces of Real property instead of just one.
Do your homework, check with the local municipality to make sure you can place an additional home on the land. Know all of your options and weigh out what is best for the future. What is easiest isn't always best the best financial answer.