Owning a second home may generate certain tax breaks. However, there are many favorable tax rules available for primary residences that do not apply to second homes. In this tough real estate market, maximizing tax breaks can help to sustain ownership and avoid foreclosures. Here is a survey of the rules that do and do not apply to vacation homes.
Buying a Vacation Home
Given the soft market, buyers may be able to find considerable bargains for vacation homes. This is especially so in certain areas hardest hit by foreclosures and property value declines. Buying a vacation home does not entitle the owner to claim the first-time homebuyer credit. This credit of 10 percent of the purchase price (up to a top credit of $8,000) is only for the purchase of a principal residence on or after Jan. 1, 2009, and before Dec. 1, 2009 (Code Sec. 36(a)).
