Looking for a second home definition? It’s much more complicated than you might think.
Here’s what you need to know to classify your home.

What’s a second home?

A second home is a home you don’t live in full-time but whose primary purpose isn’t as a rental property. But this is a vague definition and there are some situations where the term “second home” is more specifically defined.

With that in mind, here’s a rundown of what makes a home a second home and why it’s important to know.

Three types of homes
For most purposes, residential properties can be grouped into three categories:

Primary residences
This is the home you live in most of the time. The exact definition depends on who you ask, but the IRS defines it as a home you owned and lived in for at least two of the past five years. Generally speaking, a primary residence is the home where you live most of the year. It’s usually close to where you work, too.

Second home
This is a home you own that’s not your primary residence, but whose primary function isn’t as an investment property. To qualify as a second home, you must live in it for at least part of the year. Also, “second” is somewhat misleading. It’s possible to own more than one “second home.”

Investment property
This is a home you own for the primary purpose of renting out. That’s not to say that you can never use an investment property for personal use. But it can’t be the main function of the home.

What makes a second home, specifically?
When it comes to tax purposes, a property can be considered a second home under two conditions:

  • You live in it for at least 14 days each year.
  • You live in it for 10% of the days you rent it out.

You have to satisfy the greater option. For example, if you rent out a home for 180 days of the year and live in it for 18 days or more, it’s considered a second home for things like the mortgage interest deduction.

Many lenders have more stringent requirements than the IRS. In fact, many lenders won’t offer second home financing if you plan to rent out the home at all.

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