Do I Need a Primary Residence to Use a Vacation Home as a Tax Write-Off?

You don't need tax write-offs for a main home to write off vacation home items.
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The IRS only allows you to declare one place as your primary residence, but you can take tax write-offs for a vacation home even if you don’t have any write-offs for a main home. For example, if you rent your primary residence or live with relatives, you don’t have any tax deductions for a main home. But you’re entitled to tax write-offs for a second home as long as it has sleeping, cooking and toilet facilities.

Mortgage Interest

Mortgage interest is tax-deductible for a maximum of two residences, so you can deduct the interest for financing secured by a vacation home regardless of whether you have a mortgage for a main home. Only interest on the first $1 million of debt for home purchase, construction, or improvement is allowed. You can also write off the interest on up to $100,000 of borrowing against equity in the vacation home.

Property Taxes

Real estate taxes paid for any number of properties are an income tax deduction, so a deduction is always allowed for your vacation home. You can deduct amounts paid to taxing authorities that charge a uniform rate on assessed values. The tax has to benefit the general public, so you can’t include an assessment for something that helped a limited group, such as a special tax for adding a sidewalk in your neighborhood.

Sales Taxes

If you deduct state and local sales tax instead of state and local income tax on your federal tax return, your vacation home may help. You can deduct the amount from a standard table based upon your income plus sales tax paid for certain special categories -- for instance, sales tax charged on building materials, such as materials to fix a vacation home. You can even deduct sales tax paid for a mobile home or prefabricated home.

Mortgage Insurance

You can write off mortgage insurance paid for a qualified home, which includes a vacation home. Your mortgage may require this type of insurance and add the cost to your loan payments. Your home lender reports to you annually any mortgage insurance cost, along with mortgage interest paid. You can only deduct mortgage insurance for a loan you obtained after December 31, 2006.

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