Vacation Home

AAA

DEFINITION of 'Vacation Home'

A dwelling other than the owner's primary residence that is used for recreational purposes, like vacations (hence the name). Because vacation homes are only used at certain times, many owners will rent out their vacation homes when they are not using them. For example, a couple living in Maine might occupy a vacation home in Florida during Maine's coldest months and rent it out to other people for the rest of the year.

INVESTOPEDIA EXPLAINS 'Vacation Home'

Mortgages on vacation homes typically have higher interest rates than mortgages on one's primary residence, because they have a higher risk of default (in the event of a reversal of fortunes, individuals are more apt to save their primary residence than a temporary one). Nevertheless, most of the other perks of home ownership still apply, athough the restrictions are a bit tighter. If one does rent out the vacation home, then there are limitations as to how long the owner can reside there and still deduct rental expenses. The sale of a vacation home does not allow for the same income tax deductions as the sale of a primary residence does.

RELATED TERMS
  1. Personal Use Property

    A type of property that an individual does not use for business ...
  2. Staycation

    A vacation spent at or near your own home, rather than traveling ...
  3. Personal Property

    A type of property which, in its most general definition, can ...
  4. Condotel

    A condominium project that is operated as a hotel with a registration ...
  5. Property Tax

    A tax assessed on real estate by the local government. The tax ...
  6. Main Home

    A term used by the Internal Revenue Service (IRS) to define the ...
RELATED FAQS
  1. What are the warning signs of online hotel / travel booking scams?

    Travel booking scams ask travelers to book a vacation stay at a residential rental property that is fake or that belongs ... Read Full Answer >>
Related Articles
  1. Insurance

    Top 9 Vacation Destinations For Wall Street Geeks

    Indulge your inner geek with one of these financial-themed holiday getaways.
  2. Budgeting

    Budget-Friendly Summer Fun

    Keep the kids out of your hair and wallet by saving on summer camps, sports leagues, day trips and more.
  3. Retirement

    Retirement Living: Renting Vs. Home Ownership

    Here are three simple questions you should consider when weighing this decision.
  4. Personal Finance

    Save On Planes, Trains And Automobiles

    Getting to, and around, your travel destination doesn't need to break the bank.
  5. Options & Futures

    Tips For Renting A Vacation House

    Follow these nine steps to get a picture-perfect summer shack at a great price.
  6. Options & Futures

    Timeshares: Dream Vacation Or Money Pit?

    This popular real estate product has its advantages, but don't expect to make a profit.
  7. Taxes

    Vacation Home Or Income-Producing Investment?

    There is an alternative to letting your cottage sit empty all year, but turning a profit won't be easy.
  8. Investing

    Find the Private Island of Your Dreams

    The perks, the problems and the pleasures of owning your own little piece of paradise.
  9. Budgeting

    Unconventional Destinations To Stretch Vacation Dollars

    By picking a destination that's off the beaten path, travelers will meet few tourists and, as a result, will find their vacation much less stressful.
  10. Home & Auto

    Strategies To Buy The Perfect Vacation Home

    Ask yourself these six questions to make the right decision about a vacation property.

You May Also Like

Hot Definitions
  1. Hedging Transaction

    A type of transaction that limits investment risk with the use of derivatives, such as options and futures contracts. Hedging ...
  2. Bogey

    A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the ...
  3. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  4. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  5. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  6. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!