Vacation Home


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.

BREAKING DOWN '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.

  1. Property Tax

    A tax assessed on real estate by the local government. The tax ...
  2. Non-Owner Occupied

    A classification used in mortgage origination, risk-based pricing ...
  3. Personal Use Property

    A type of property that an individual does not use for business ...
  4. Principal Residence

    The primary location that a person inhabits. It doesn't matter ...
  5. Personal Property

    A type of property which, in its most general definition, can ...
  6. Main Home

    A term used by the Internal Revenue Service (IRS) to define the ...
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