Second Home Tax Calculator 2026 — Vacation Home Tax Rules
Calculate taxes on second and vacation homes. §280A 14-day rule, $750K combined mortgage cap, $40K SALT deduction, no §121 exclusion on sale. See true after-tax ownership cost.
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Combined cap: $750,000 $
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Combined cap: $40,000 (OBBBA 2026) days
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§280A Classification
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Annual Tax Savings (deductions)
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Deductible Mortgage Interest
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Property Tax Deductible (SALT)
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True Monthly After-Tax Cost
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Net Rental Income / Loss
Second Home Tax Breakdown
Second Home Tax Rules Explained
The tax treatment of a second home depends critically on how many days you use it personally versus rent it out. The §280A rules create two very different tax regimes.
Classification Rules
Personal Days ≤ 14 AND ≤ 10% of Rental Days → Rental Property (Schedule E)
Personal Days > 14 OR > 10% of Rental Days → Personal Residence with Rental
Combined Mortgage Cap: min($750,000 − primary mortgage, 2nd home balance)
SALT Available for 2nd home: max(0, $40,000 − SALT already used)
Deductible Interest = Annual Interest × (deductible loan ÷ total loan)
Personal Days > 14 OR > 10% of Rental Days → Personal Residence with Rental
Combined Mortgage Cap: min($750,000 − primary mortgage, 2nd home balance)
SALT Available for 2nd home: max(0, $40,000 − SALT already used)
Deductible Interest = Annual Interest × (deductible loan ÷ total loan)
Example
$400K vacation home, $280K mortgage @ 7%, 30 personal days, 60 rental days, $18K rent:
Classification: Personal residence (30 days personal > 14 days; 30 > 6 = 10% of 60)
Annual interest: ~$19,600 | Combined loans: $730K (under $750K cap) → fully deductible
SALT remaining: $40,000 − $18,000 = $22,000 available → $5,000 property tax deductible
Total itemized from 2nd home: ~$24,600 | True annual cost after taxes: see results
Classification: Personal residence (30 days personal > 14 days; 30 > 6 = 10% of 60)
Annual interest: ~$19,600 | Combined loans: $730K (under $750K cap) → fully deductible
SALT remaining: $40,000 − $18,000 = $22,000 available → $5,000 property tax deductible
Total itemized from 2nd home: ~$24,600 | True annual cost after taxes: see results
Extended
Rental vs Primary Residence vs Investment Property Tax Comparison
Compare after-tax cost and benefit across three ownership scenarios
Ownership Scenario Comparison
How does the tax treatment change across different use patterns? Compare keeping it as a personal home vs pure rental vs selling.
| Use Scenario | Classification | Deductions | Tax Savings | Net Annual Cost |
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Sale Tax Warning: No §121 exclusion on vacation home sale. All capital gains taxed at LTCG rates (0%/15%/20%). Depreciation recaptured at 25%. Plan sale timing carefully if you convert vacation home to primary residence (must live there 2 of last 5 years to qualify).
Frequently Asked Questions
What is the 14-day rule for vacation homes?
Under IRC §280A, if personal use does not exceed 14 days per year (or 10% of rental days, whichever is greater), the property is treated as a rental property for tax purposes. You can deduct all rental expenses including depreciation on Schedule E. If personal use exceeds 14 days AND 10% of rental days, it's treated as a personal residence with rental income — deductions are limited and cannot create a net loss.
Is mortgage interest on a second home deductible?
Yes, but the $750,000 combined mortgage debt cap applies across all homes. If your primary home has a $600,000 mortgage, you can only deduct interest on the first $150,000 of your vacation home mortgage. Mortgages existing before December 15, 2017 are grandfathered at the $1,000,000 cap. The interest deduction requires itemizing, which means your total itemized deductions must exceed your standard deduction ($16,100 single / $32,200 MFJ in 2026).
How does the $40,000 SALT cap affect vacation homes?
Property taxes on your second home count toward the $40,000 SALT cap under OBBBA 2026. If you pay $12,000 in state income taxes and $6,000 in primary home property taxes, you've used $18,000 of your cap, leaving $22,000 for vacation home property taxes. If your vacation home property tax is $8,000, only $8,000 is deductible (within the remaining cap). Second-home property taxes do not receive any special exclusion.
Can I exclude capital gains when I sell my vacation home?
No. The §121 capital gains exclusion ($250,000 single / $500,000 MFJ) only applies to your principal residence — defined as the home where you lived for at least 2 of the last 5 years. A vacation home that was never your primary residence does not qualify. If you've owned the vacation home for more than a year, gains are taxed at long-term capital gains rates (0%, 15%, or 20% depending on income). Depreciation taken must also be recaptured at 25%.
What is the difference between a second home and a rental property?
A second home is primarily for personal use (stays, vacations) with possible rental income. A rental property is acquired primarily to generate income. The IRS classification depends on use days: under 14 days personal = rental property treatment (full expenses deductible, depreciation allowed). Over 14 days personal and over 10% of rental days = second home/residence treatment (mortgage interest and property taxes deductible if itemizing, rental income expenses limited, no depreciation on personal use portion).