The Internal Revenue Service (IRS) has specific guidelines for defining a vacation home. According to the IRS, a vacation home is a property that you own and use for personal purposes, usually for vacation or recreation. The property can be a house, apartment, condominium, mobile home, boat, or similar property.
What is the difference between a primary residence and a vacation home?
A primary residence is the place where you live most of the time. It’s where you receive your mail, pay your bills, and have your driver’s license registered. A vacation home, on the other hand, is typically used only for short periods throughout the year.
How does the IRS treat rental income from a vacation home?
If you rent out your vacation home for less than 15 days per year, any rental income you receive is tax-free. However, if you rent out your vacation home for more than 15 days per year, you must report all rental income to the IRS.
Can I deduct expenses related to my vacation home?
Yes. If you use your vacation home for personal purposes and also rent it out during the year, you can deduct expenses related to renting out the property such as advertising costs and cleaning fees.
- You can also deduct mortgage interest and property taxes on Schedule A of Form 1040 if you itemize deductions.
- If you rent out your vacation home for more than 14 days per year but use it yourself for less than 14 days or 10% of the time it’s rented (whichever is greater), then it’s considered a rental property rather than a second home.
Conclusion
In summary, a vacation home is defined by the IRS as a property that you own and use for personal purposes such as vacations or recreation. Rental income from your vacation home is taxable if you rent it out for more than 15 days per year, and you can deduct expenses related to renting out the property.
Deductions for mortgage interest and property taxes are available if you use the property as a second home rather than a rental property. It’s always a good idea to consult with a tax professional regarding your specific situation.