Yes there are available deductions related to a second home. However, if you rent out the home different rules may apply.
For a Second Home-
Mortgage interest
If you use the place as a second home—rather than renting it out—interest on the mortgage is deductible within the same limits as the interest on the mortgage on your first home.
- For tax years prior to 2018, you can write off 100% of the interest you pay on up to $1.1 million of debt secured by your first and second homes and used to acquire or improve the properties. (That's a total of $1.1 million of debt, not $1.1 million on each home.) The rules that apply if you rent out the place are discussed later.
- Beginning in 2018, the limit is reduced to $750,000 of debt secured by your first and second home for binding contracts or loans originated after December 16, 2017.
- For loans prior to this date, the limit is $1 million ($1.1 million without the $100,000 home equity portion).
Property taxes
You can deduct property taxes on your second home, too. In fact, unlike the mortgage interest rule, you can deduct property taxes paid on any number of homes you own. However, beginning in 2018, the total of all state and local taxes deducted, including property taxes, is limited to $10,000 per tax return.
If you rent out the second home-
Lots of second-home buyers rent out the property part of the year to get others to help pay the bills. Very different tax rules apply depending on the breakdown between personal and rental use.
If you rent the place out for:
- 14 or fewer days during the year, you can pocket the rental income tax-free. Even if you're charging $5,000 a week, the IRS doesn't want to hear about it. The house is considered a personal residence, so you deduct mortgage interest and property taxes under the standard rules for a second home.
- More than 14 days, you must report all rental income. You also get to deduct rental expenses, and that gets complicated because you need to allocate costs between the time the property is used for personal purposes, and the time it is rented.
