UPDATE: This post is from 2014. There remain tax breaks for vacation homes, if you itemize. Because of recent tax changes, fewer people itemize, and your real estate taxes are less likely to be deductible because with two homes you will likely exceed the SALT tax restrictions. However, if generate income renting it out during the year, the expenses of the investment property will be deductible. This area has gotten more complicated than when this post was written, but there remain vacation home tax deductions.

It’s almost summer and if you are thinking about buying a vacation home you might be wondering what the tax ramifications are. Some expenses, including mortgage interest and real estate taxes, are generally deductible on Schedule A the same way they are for primary homes. You will need to watch for the dollar limits ($1 million or less, $500,000 or less if married filing separately) on the combined mortgage interest of your main home and vacation home. There remain vacation home tax deductions, you just may have to be more creative to qualify for them.

You might consider renting the vacation home out during times when you aren’t enjoying it yourself. There’s a neat rule that says if you rent the property for less than 14 days during the year, you do NOT have to report the rental income. But once you go over 14 days you will need to report the rental income and expenses on Schedule E. At that point speak with your CPA to figure out how to best take advantage of that situation.

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Interested in learning more about these opportunities? The tax opportunities related to Real Estate Investment may also apply to vacation homes. If you structure your vacation home as a real estate investment, you are likely to qualify for more vacation home tax deductions.