What is a place called a second home?
What is a place called a second home? A second home is a residence you intend to occupy for part of the year in addition to a primary residence. Usually, a second home is used as a vacation home. But it could also be a property that you regularly visit, such as a condo in a city where you often conduct business.
How does the IRS determine your primary residence?
If you own and live in just one home, then that property is your main home. If you own or live in more than one home, then you must apply a facts and circumstances test to determine which property is your main home. While the most important factor is where you spend the most time, other factors are relevant as well.
What is the difference between a vacation home and a second home?
A second home is typically thought of as a vacation home, or one you intend to use on a part-time basis. A second home must meet the following criteria to qualify for a second home loan: The property must be suitable for year-round occupancy, even if you only intend to use it part of the year.
Is a second home considered income?
If you choose to rent out a second home, you may be subject to income tax on rental earnings if you rent for more than 14 days. It's a good idea to consult with your tax advisor and financial professional before purchasing a second home to explore how it might affect your financial goals.