Financial Questions and Answers
Q: Is there a difference between a home equity line of credit and a second mortgage?
A: Yes; though they are both home equity loans that use a residence as security for the loan, they are different. The home equity line of credit is structured as a revolving line of credit that allows you to borrow as much as you choose at any point in time. You simply write a check for whatever amount you need. You make payments only on the amount you borrow, not on the full amount that is available. However, your total borrowing cannot exceed your credit limit. A second mortgage, also known as a closed-end home equity loan, is a loan for a fixed amount. You are required to repay this loan over a fixed term, just like a primary mortgage.
Q: When can I begin to depreciate a rental property I own for tax purposes?
A: You can start to depreciate a property when you first place it in service for the production of income or for use in a trade or business. According to the tax code, property is considered placed in service when it is ready and available for its specific use. If you plan to advertise the property for rent, you can begin depreciating it in the month you first place the advertisement. You don’t have to wait to until you actually rent the property.
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