How Do You Apply for a Second Home Tax Deduction?


Quick Answer

A homeowner can apply for various tax breaks on her second home when she files her yearly taxes. The amount she writes off depends on whether she utilizes the property for personal use or rents it out, states TurboTax.

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How Do You Apply for a Second Home Tax Deduction?
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Full Answer

A homeowner can deduct 100 percent of her second home's mortgage interest on mortgages up to $1.1 million if she does not rent the property. All property taxes can also be deducted, according to TurboTax.

The tax breaks change once a second home brings in rental income. If the homeowner rents her second home for 14 days or less per year, she can pocket the rental income tax-free. However, rental income must be reported to the IRS if the property is rented out for more than two weeks a year, explains Investopedia .

The homeowner can offset this income by claiming rental expenses such as mortgage interest, property taxes, insurance, property management fees, utilities and 50 percent depreciation. These expenses have to be divided between the time the property was used for personal purposes and the number of days it was rented. If the second home is occupied for a total of three months a year, out of which the homeowner uses it herself for one month while renters use it for the remaining two months, then the homeowner can claim two-thirds of the yearly rental expenses as a tax deduction. The one exception is property management fees, which can be deducted in full, notes Kiplinger.

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