Deducting Mortgage Interest on a Vacation Home
You may be able to write off all mortgage interest on a second home if you’re not renting it out for extended periods.
Question: I’m about to buy a lake house as a second home. I plan to go there a few times a month but not live there full-time, and I don’t plan to rent it out. Is the mortgage interest tax-deductible?
Answer:
Yes. As long as you don’t rent out a second home for more than 14 days each year, you can deduct the mortgage interest you pay on it. But your deduction is capped at the interest you pay on up to $1 million of debt on your first and second homes combined. You can also deduct property taxes on your first and second home. All of these deductions are only available if you itemize.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
If you change your mind about renting the lake house to others, you’ll still be able to deduct the mortgage interest as long as you don’t lease it out for more than two weeks a year. And any rental income you receive will be tax-free, too, if you stay within the two-week limit.
If you rent out the house for longer than that, you’ll have to report the rental income to the IRS. But you can still deduct some of the mortgage interest and rental expenses, such as insurance and utilities, for the portion of the time that you rent out the house. Calculating the deduction gets complicated because you’ll need to determine how much of those costs should be allocated to when you were leasing out the house and when you were personally using it.
For more information about deducting mortgage interest on second homes and the rules for deducting rental expenses, see Tax Planning for Owning a Second Home and Buying a Vacation Home. Also see IRS Publication 530, Tax Information for Homeowners.
-
Fed Vibes Lift Stocks, Dow Up 515 Points: Stock Market TodayIncoming economic data, including the January jobs report, has been delayed again by another federal government shutdown.
-
65 or Older? Cut Your Tax Bill Before the Clock Runs OutThanks to the OBBBA, you may be able to trim your tax bill by as much as $14,000. But you'll need to act soon, as not all of the provisions are permanent.
-
Selling Your Business? Start Planning Two Years in AdvanceWay before selling your business, you can align tax strategy, estate planning, family priorities and investment decisions to create flexibility.
-
Don't Overpay the IRS: 6 Tax Mistakes That Could Be Raising Your BillTax Tips Is your income tax bill bigger than expected? Here's how you should prepare for next year.
-
Will IRS Budget Cuts Disrupt Tax Season? What You Need to KnowTaxes The 2026 tax season could be an unprecedented one for the IRS. Here’s how you can be proactive to keep up with the status of your return.
-
3 Retirement Changes to Watch in 2026: Tax EditionRetirement Taxes Between the Social Security "senior bonus" phaseout and changes to Roth tax rules, your 2026 retirement plan may need an update. Here's what to know.
-
A Free Tax Filing Option Has Disappeared for 2026: Here's What That Means for YouTax Filing Tax season officially opens on January 26. But you'll have one less way to submit your tax return for free. Here's what you need to know.
-
When Do W-2s Arrive? 2026 Deadline and 'Big Beautiful Bill' ChangesTax Deadlines Mark your calendar: Feb 2 is the big W-2 release date. Here’s the delivery scoop and what the Trump tax changes might mean for your taxes.
-
Are You Afraid of an IRS Audit? 8 Ways to Beat Tax Audit AnxietyTax Season Tax audit anxiety is like a wild beast. Here’s how you can help tame it.
-
3 Major Changes to the Charitable Deduction for 2026Tax Breaks About 144 million Americans might qualify for the 2026 universal charity deduction, while high earners face new IRS limits. Here's what to know.
-
Holiday Tax Scams 2025: 'Tis the Season to be WaryTax Scams Navigating tax tricks of the holiday season may be daunting, but don't let that destroy your festive spirit
