My wife and I are considering purchasing a second home/lake property. We live in the land of 10,000 lakes (Minnesota), so we have numerous choices.

One angle that I have been considering is the tax issues related to owning a second property. The first (and most obvious) is the property taxes. The second, and more subtle, is the issues related to this being a "second home".

I asked my real estate agent and she mentioned something about there being a distance requirement between a first and second home (she thought that they needed to be separated by 60 miles). I've searched on the internet for definitions of a second home and I cannot find anything.

Does anyone know the actual definition?

You are correct, frazwood. I searched the net too and could find no satisfactory explanation of 'second home'. There were a lot of sites in Google, but only explaining the niceties of acquiring a 'second home', Unless one of our experts here comes up with an answer, I suggest you call your attorney, who you will have to discuss this with anyway, and ask him about the taxes and legalities and of course, tax breaks.

Tick

IRS Publication 936 defines a second home as any home you choose to be treated as a second home. Distance is not a factor. It could be next door or across the country.

MLSNC has it right; distance is NOT a factor.

Your primary home is the home that you spend MOST of your time in. The second home is where you spend the SECOND most time in.

BTW, you CAN deduct the mortgage interest and property taxes on BOTH your primary and secondary home as an itemized deduction, provided you do not exceed the statutory limit on the mortgage interest ($500,000 if single; $1,000,000 for a joint return) or if you do not run afoul of the Alternative Minimum Tax for the property taxes.

My wife and I are considering purchasing a second home/lake property. We live in the land of 10,000 lakes (Minnesota), so we have numerous choices.

One angle that I have been considering is the tax issues related to owning a second property. The first (and most obvious) is the property taxes. The second, and more subtle, is the issues related to this being a "second home".


Thanks everyone for the responses. I saw my real estate agent and I asked her about it again. It turns out that I misunderstood her slightly.

For the purposes of getting a mortgage, I needed 50 miles between my first and second home. Otherwise, my mortgage company would charge me a slightly higher interest rate, as they would assume that it was an "investment" rather than a "second home". So, the distance issue had nothing to do with taxes.