Mortgage interest. If your getaway is a second home (not a business property), interest is deductible just as it is for your primary residence — you may write off 100% of the interest on up to $1.1 million of combined debt on the two houses.
Rental income. You can rent your cabin for 14 or fewer days per year and pocket the cash tax-free. You’re eligible for the exclusion even if you charge tourists thousands of dollars to sleep in your beds. Once you exceed 14 days, though, you must report all rental income.
Taxes on profits. The break that allows homeowners to take up to $250,000 of profit from a home sale tax-free ($500,000 for married couples) is restricted to the sale of a primary residence. But you can extend the tax break to cover part of the profit on a second home if you convert it to your primary residence at least two years before you sell. The portion of the profit that is tax-free is based on the ratio of time after 2008 that the house was a second home to the total time you owned it. Say you buy a vacation home this year, use it as a retreat for five years, and then move in and make it your principal residence. If you sell ten years later, two-thirds of the profit would be tax-free.
Sign up for Kiplinger’s Free E-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.
-
Social Security Is Taxable, But There Are WorkaroundsIf you're strategic about your retirement account withdrawals, you can potentially minimize the taxes you'll pay on your Social Security benefits.
-
Serious Medical Diagnosis? Four Financial Steps to TakeA serious medical diagnosis calls for updates of your financial, health care and estate plans as well as open conversations with those who'll fulfill your wishes.
-
Ten Cheapest Places To Live in FloridaProperty Tax Make your Florida vacation spot daily living — these counties have the lowest property tax bills in the state.
-
Trump’s Tax Cut Risks Your SNAP, Medicaid BenefitsTax Cuts The GOP budget blueprint could slash lifesaving programs for millions of U.S. households.
-
Missed Tax Day? Nearly One Million Taxpayers Still Can File and Claim Valuable Tax RefundsTax Refunds As many as one million taxpayers could be missing out on a significant tax refund.
-
Which Generation Pays the Most Tax in the US?Tax Burden Polls show that most people feel like taxes are unfair. But which age group bears the brunt of the tax burden in the United States?
-
How the Trump Harvard IRS Tax Threat Could Impact YouTax Law Trump's latest higher education showdown raises fundamental questions that could reach beyond Harvard's nonprofit tax status.
-
Tax Day 2025: Don’t Miss These Freebies, Food Deals and DiscountsTax Day You can score some sweet deals on April 15 in some select restaurants like Burger King, Shake Shack, and more.
-
Tax Time: Does Your Kid Influencer Owe Taxes?State Tax Some minors are making big money on social media. Here’s how to know if they need to file taxes.
-
Trump Plans to Terminate IRS Direct File programTax Filing The IRS Direct File program was piloted last year in 12 states and has since expanded to 25. But will it last under the Trump administration?
