What qualifies as a vacation home?

A vacation home is a property aside from one's primary residence, that is used mainly for vacationing. A vacation home is often located some distance away from the primary residence. A vacation property may also be rented out to produce additional income when it's not being used.



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The IRS will consider a vacation home either a residence or a rental property based on how many days it is used as a rental vs. personal. Rental income from vacation homes rented less than 15 days during the year doesn't need to be reported on tax forms.

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A second home is typically thought of as a vacation home, or one you intend to use on a part-time basis. A second home must meet the following criteria to qualify for a second home loan: The property must be suitable for year-round occupancy, even if you only intend to use it part of the year.

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What rules should all vacation rental homes have?
  • Do not exceed the number of people allowed. ...
  • Do not make noise during sleeping hours and do not disturb the neighbours. ...
  • Leave the house at check-out time. ...
  • Notify the person responsible for any damage or incident to the property.


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Scott McGillivray's Rules for a Successful Vacation Rental Property
  • 1 / 5. Vacation House Rule #1: Do Your Research. ...
  • 2 / 5. Vacation House Rule #2: Design It. ...
  • 3 / 5. Vacation House Rule #3: Get Noticed. ...
  • 4 / 5. Vacation House #4: Roll up Your Sleeves. ...
  • 5 / 5. Vacation House Rule #5: Be Your Guest.


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For borrowers in the United States, the vacation home must typically be located at least 50 miles away from your primary residence in order to enjoy the “second home” classification that is coupled with a lower interest rate.

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Ultimately, whether or not a vacation home pays for itself depends on several factors such as location and rental income potential.

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The pros can include equity appreciation, tax deductions, and having a personal getaway to use for your own vacations. The cons can include the effort of maintaining an additional property, and the extra expenses—both unexpected costs and expected ones, like taxes and insurance.

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