- Is occupied by the owner at least 14 days out of the year
- Is rented to others 14 days or fewer out of the year
- Is occupied by the owner fewer than 14 days out of the year
- Is rented to others more than 14 days out of the year
- Is occupied by the owner more than 14 days out of the year
- Is rented to others more than 14 days out of the year
Luxury second homes
Second home tax benefits
As long as you occupy your second home for more than 14 days a year, you may qualify for these second home tax breaks:Mortgage interest deduction
Single filers and married couples filing jointly can deduct mortgage interest up to a total of $750,000 from all properties they own, including a principal residence and their second homes. This is subject to change in 2025, when the Tax Cuts and Jobs Act is scheduled to expire. At that time it is expected that the $1 million limit will return.Property tax deduction
You can deduct property taxes on all the properties you own, with a maximum deduction of up to $10,000 per tax return, or $5,000 if married filing separately. Keep in mind that this is included in the deduction for state and local income taxes (SALT), so you might reach that $10,000 quickly with your principal residence and be unable to deduct property taxes from a second home.Tax-free rental income
The IRS does not require you to report any rental income you receive from renting out your second home if you rent it out 14 or fewer days each year. Some second home owners choose to rent out their second home for two weeks each year so they can use the tax-free income to offset maintenance costs or property taxes on a second home.Home equity loan interest deduction
If you take out a home equity loan or home equity line of credit (HELOC) on your second home and you use the money for home improvements on that property, you can deduct the amount in interest you paid on that loan from your taxable income for the year. Saving all your home maintenance receipts will provide evidence for this deduction if needed.What you can’t use as a tax deduction on a second home
You may have heard about certain real estate tax deductions and wonder if they’ll apply to your second home. Here are a few tax breaks that don’t apply to vacation homes:- Loss
- Operating expenses/repairs
- Rental expenses (for the 14 or fewer days rented)