Vacation homes can offer tax breaks if treated as investments.
You may deduct mortgage interest and property taxes under specific rules.
Rental usage requirements dictate how much expense you can claim.
Taxes
How To: Second Home Tax Deductions
How To: Second Home Tax Deductions
How To: Second Home Tax Deductions
Zoe Team
6 min read
Frequently Asked Questions
Frequently Asked Questions
Can I deduct mortgage interest on a second home?
Yes, generally you can deduct mortgage interest on a primary and second home, subject to total debt limits.
Does renting out my second home affect taxes?
Yes, the amount of personal vs. rental usage determines if you can deduct specific operating expenses like utilities.
Are property taxes on second homes deductible?
Yes, property taxes paid on a second home are generally deductible, subject to the overall SALT deduction limits.
Whether it’s an investment vacation home, or an eventual retirement residence, get the most out of your second home with potential tax deductions.
Picture this: escaping from the city in the midst of a blistering summer to your blissful second home by the lake. If you have a second home or are thinking about buying a home, it makes sense to take advantage of the tax deductions available to you as a second-home owner. Be it for use as a rental, a vacation home, or an eventual retirement residence, you can get the most out of your second home. You can also reduce costs through tax deductions on mortgage interests, property taxes, and rental expenses.
Your Property and Your Taxes
Did you know that the way you use your property will affect how you do your taxes? It could even affect what type of deductions are available! For example, a house that is primarily used as a rental differs from one that is used for personal vacations. And if your house is intended for both uses, you will have to factor in how much time is allocated to each one. It is also important to consider the recent Tax Cuts and Jobs Act (TCJA), which lowered the interest rate deduction limit and set new parameters for deducing based on home equity interest.
Mortgage Interest Deduction
If your second home is for personal use, you may be able to obtain a mortgage interest deduction the same way you would on your primary home. The TCJA now allows those who itemize their deductions to exclude interest on mortgages of up to $750,000 if you file on your own or together with a spouse, or $375,000 if you file separately.
To qualify, the mortgage must be a secured debt on a qualified home you own and you should file a Schedule A form to itemize your deductions. If you took out your mortgage before December 16, 2017, the old tax rules still apply, meaning you can deduct up to 100 percent mortgage interest on up to $1 million in debt, or $500,000 if you file separately.
If the property is instead primarily used as a rental, you must consider how much of the year you rent it out and how much you use it on a personal basis. If you rent it for fewer than 15 days per year, you don’t have to report this income to the IRS as the house is still considered a personal residence. If you rent it at a fair market price for more days and personally use it for less than 14 days per year (or 10% of the number of days it was rented) it is considered a rental.
Reporting Income From Renting A Second Home
Income from properties considered rentals must be reported as rental income. That said, you can still itemize and get deductions from rental expenses, including mortgage interest, property taxes, insurance costs, utilities, maintenance, and depreciation of the property. These costs must be evaluated considering personal use of the home and the time it was rented.
Your second home can be both a rental and a residence if you rent it for 15 days or more in the tax year and also use it as a residence. If this is the case you also have to report the rental income and can’t deduct expenses attributed to the rental, but can deduct your interest and taxes if you itemize your deductions.
You will have to divide the costs between the times it is used as personal or as a rental when filing taxes. It is a residence if you or a family member uses the home for more than 14 days or 10% of the number of days you rent the home. Maintenance time does not count as personal use so keep your receipts to prove you weren’t there.
Home-equity Interest Deduction
You may be able to write off interest on a home equity loan. Previously, you could deduct interest regardless of how the money was spent. However, TCJA has changed the rules, and interest can only be deducted if the money was used “to buy, build, or substantially improve the taxpaye r’s home that secures the loan.” The loan must also be bound by your primary or second home and can’t exceed its cost.
So, you must have a mortgage for your second home if you want to deduct interest on it. The deduction limit of $750,000 if married filing jointly (and $375,000 if filing separately) applies to all mortgage and home equity debt. This means you can’t claim a deduction on home equity that exceeds that amount if you already have some in mortgage debt.
Property Tax Deduction
Here’s the good news: property taxes can also be deducted on as many properties as you own. The TCJA limits, however, the total of state and local taxes eligible for deduction at $10,000 per tax return, or $5,000 if married filing separately. You may not enjoy additional tax breaks if you already exceed this limit with your first home.
What Happens If I Want to Sell?
If you are looking into selling your second home, be prepared to pay a capital gains tax on the complete profit. This is charged by the IRS when you sell an asset for more than what you originally paid for it. If you rent out your second home for profit, you can deduct the loss and this is taxed at a minimum rate of 28%. The sale must be treated as a part business, part personal if the home was used for both personal use and rental.
You could potentially reduce the hit if you make your second home, your primary one, for at least two years in the five years prior to the sale. This qualifies it as your primary residence, but you also cannot have taken the capital gains exclusion on the sale of another home in the two years before the sale of the property in question.
You can exclude up to $250,000 if you are single-filing and $500,000 if filing jointly. If you do not meet the two-year ownership requirement, you are only legally entitled to the exclusion if you sell the property because of a change in health, in place of employment, or an unforeseen circumstance.
Home Sweet Second Home
Owning a second home is a meaningful investment! The costs involved mean it is best to be advised on the potential implications that come along with it, particularly as tax laws are complex and change regularly. A financial advisor can help you make sense of how a second home might fall into your financial plan and navigate the best strategy for your situation.
Whether it’s an investment vacation home, or an eventual retirement residence, get the most out of your second home with potential tax deductions.
Picture this: escaping from the city in the midst of a blistering summer to your blissful second home by the lake. If you have a second home or are thinking about buying a home, it makes sense to take advantage of the tax deductions available to you as a second-home owner. Be it for use as a rental, a vacation home, or an eventual retirement residence, you can get the most out of your second home. You can also reduce costs through tax deductions on mortgage interests, property taxes, and rental expenses.
Your Property and Your Taxes
Did you know that the way you use your property will affect how you do your taxes? It could even affect what type of deductions are available! For example, a house that is primarily used as a rental differs from one that is used for personal vacations. And if your house is intended for both uses, you will have to factor in how much time is allocated to each one. It is also important to consider the recent Tax Cuts and Jobs Act (TCJA), which lowered the interest rate deduction limit and set new parameters for deducing based on home equity interest.
Mortgage Interest Deduction
If your second home is for personal use, you may be able to obtain a mortgage interest deduction the same way you would on your primary home. The TCJA now allows those who itemize their deductions to exclude interest on mortgages of up to $750,000 if you file on your own or together with a spouse, or $375,000 if you file separately.
To qualify, the mortgage must be a secured debt on a qualified home you own and you should file a Schedule A form to itemize your deductions. If you took out your mortgage before December 16, 2017, the old tax rules still apply, meaning you can deduct up to 100 percent mortgage interest on up to $1 million in debt, or $500,000 if you file separately.
If the property is instead primarily used as a rental, you must consider how much of the year you rent it out and how much you use it on a personal basis. If you rent it for fewer than 15 days per year, you don’t have to report this income to the IRS as the house is still considered a personal residence. If you rent it at a fair market price for more days and personally use it for less than 14 days per year (or 10% of the number of days it was rented) it is considered a rental.
Reporting Income From Renting A Second Home
Income from properties considered rentals must be reported as rental income. That said, you can still itemize and get deductions from rental expenses, including mortgage interest, property taxes, insurance costs, utilities, maintenance, and depreciation of the property. These costs must be evaluated considering personal use of the home and the time it was rented.
Your second home can be both a rental and a residence if you rent it for 15 days or more in the tax year and also use it as a residence. If this is the case you also have to report the rental income and can’t deduct expenses attributed to the rental, but can deduct your interest and taxes if you itemize your deductions.
You will have to divide the costs between the times it is used as personal or as a rental when filing taxes. It is a residence if you or a family member uses the home for more than 14 days or 10% of the number of days you rent the home. Maintenance time does not count as personal use so keep your receipts to prove you weren’t there.
Home-equity Interest Deduction
You may be able to write off interest on a home equity loan. Previously, you could deduct interest regardless of how the money was spent. However, TCJA has changed the rules, and interest can only be deducted if the money was used “to buy, build, or substantially improve the taxpaye r’s home that secures the loan.” The loan must also be bound by your primary or second home and can’t exceed its cost.
So, you must have a mortgage for your second home if you want to deduct interest on it. The deduction limit of $750,000 if married filing jointly (and $375,000 if filing separately) applies to all mortgage and home equity debt. This means you can’t claim a deduction on home equity that exceeds that amount if you already have some in mortgage debt.
Property Tax Deduction
Here’s the good news: property taxes can also be deducted on as many properties as you own. The TCJA limits, however, the total of state and local taxes eligible for deduction at $10,000 per tax return, or $5,000 if married filing separately. You may not enjoy additional tax breaks if you already exceed this limit with your first home.
What Happens If I Want to Sell?
If you are looking into selling your second home, be prepared to pay a capital gains tax on the complete profit. This is charged by the IRS when you sell an asset for more than what you originally paid for it. If you rent out your second home for profit, you can deduct the loss and this is taxed at a minimum rate of 28%. The sale must be treated as a part business, part personal if the home was used for both personal use and rental.
You could potentially reduce the hit if you make your second home, your primary one, for at least two years in the five years prior to the sale. This qualifies it as your primary residence, but you also cannot have taken the capital gains exclusion on the sale of another home in the two years before the sale of the property in question.
You can exclude up to $250,000 if you are single-filing and $500,000 if filing jointly. If you do not meet the two-year ownership requirement, you are only legally entitled to the exclusion if you sell the property because of a change in health, in place of employment, or an unforeseen circumstance.
Home Sweet Second Home
Owning a second home is a meaningful investment! The costs involved mean it is best to be advised on the potential implications that come along with it, particularly as tax laws are complex and change regularly. A financial advisor can help you make sense of how a second home might fall into your financial plan and navigate the best strategy for your situation.
Disclosures: Zoe Financial, Inc. ("Zoe Financial") is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. Zoe Financial provides investment advisory services and access to independent registered investment advisers through its platform. The information provided by Zoe Financial is for educational and informational purposes only and should not be construed as personalized investment advice or as an offer to buy or sell any security. All investments involve risk, including possible loss of principal. Past performance is not indicative of future results. Clients should consult with their own financial, tax, or legal professionals before making any investment decisions. The material presented by Zoe Financial is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Material presented has been gathered from sources believed to be reliable, however Adviser cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Past performance is no guarantee of future results. Zoe Financial does not provide legal or tax advice, and nothing contained in these materials should be taken as legal or tax advice. SEC Registration does not constitute an endorsement of Zoe Financial by the SEC nor does it indicate that Zoe Financial has attained a particular level of skill or ability. The sole purpose of this material is to inform, and it in no way is intended to be an offer or solicitation to purchase or sell any security, other investment or service, or to attract any funds or deposits. Investments mentioned may not be appropriate for all clients. Before making any investment, each investor should carefully consider the risks associated with the investment, as discussed in the applicable offering memorandum, and make a determination based upon their own particular circumstances, that the investment is consistent with their investment objectives and risk tolerance. Lower expenses do not guarantee better investment performance. Certain information contained herein may constitute forward-looking statements. Due to various risks and uncertainties, actual events, results or the performance of a fund may differ materially from those reflected or contemplated in such forward-looking statements.
Disclosure: This page is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.
Investment advisory services are provided by Zoe Financial, Inc. (Zoe Financial), an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Learn more about Zoe Financial on the SEC’s Investment Adviser Public Disclosure website. Brokerage services are provided by Zoe Securities LLC and Apex Clearing Corporation, members of the Financial Industry Regulatory Authority Inc. (FINRA) and Securities Investor Protection Corporation (SIPC). Learn more about Zoe Securities and Apex on FINRA’s BrokerCheck website.
The information in the visuals above is for illustrative purposes only and does not represent an actual user's account, balance, or return. Zoe Financial does not provide tax or legal advice.
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Some of this content may have been generated with the assistance of AI. Please review and sense-check all outputs, as AI tools can occasionally produce incomplete or inaccurate information.
In certain situations, you may be required to disclose that the content was “generated by AI.” Please confirm any specific disclosure or labelling requirements with Compliance.
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Copyright © 2026 Zoe Financial, Inc. | All rights reserved
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Disclosure: This page is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.
Investment advisory services are provided by Zoe Financial, Inc. (Zoe Financial), an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Learn more about Zoe Financial on the SEC’s Investment Adviser Public Disclosure website. Brokerage services are provided by Zoe Securities LLC and Apex Clearing Corporation, members of the Financial Industry Regulatory Authority Inc. (FINRA) and Securities Investor Protection Corporation (SIPC). Learn more about Zoe Securities and Apex on FINRA’s BrokerCheck website.
The information in the visuals above is for illustrative purposes only and does not represent an actual user's account, balance, or return. Zoe Financial does not provide tax or legal advice.
Explore the Zoe Wealth Platform with AI
Some of this content may have been generated with the assistance of AI. Please review and sense-check all outputs, as AI tools can occasionally produce incomplete or inaccurate information.
In certain situations, you may be required to disclose that the content was “generated by AI.” Please confirm any specific disclosure or labelling requirements with Compliance.
(646) 680-9244
support@zoefin.com
666 Third Ave, 6th Floor
New York, NY, 10017
Copyright © 2026 Zoe Financial, Inc. | All rights reserved
Find an Advisor
Retirement Planning
Disclosure: This page is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.
Investment advisory services are provided by Zoe Financial, Inc. (Zoe Financial), an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Learn more about Zoe Financial on the SEC’s Investment Adviser Public Disclosure website. Brokerage services are provided by Zoe Securities LLC and Apex Clearing Corporation, members of the Financial Industry Regulatory Authority Inc. (FINRA) and Securities Investor Protection Corporation (SIPC). Learn more about Zoe Securities and Apex on FINRA’s BrokerCheck website.
The information in the visuals above is for illustrative purposes only and does not represent an actual user's account, balance, or return. Zoe Financial does not provide tax or legal advice.
Explore the Zoe Wealth Platform with AI
Some of this content may have been generated with the assistance of AI. Please review and sense-check all outputs, as AI tools can occasionally produce incomplete or inaccurate information.
In certain situations, you may be required to disclose that the content was “generated by AI.” Please confirm any specific disclosure or labelling requirements with Compliance.
(646) 680-9244
support@zoefin.com
666 Third Ave, 6th Floor
New York, NY, 10017
Copyright © 2025 Zoe Financial, Inc. | All rights reserved