Definition of vacation home
- His parents have a beautiful vacation home by the lake.
: a period spent away from home or business in travel or recreation
: a scheduled period during which activity (as of a court or school) is suspended
: a period of exemption from work granted to an employee
: to take or spend a vacation
: one's place of residence : domicile
: the social unit formed by a family living together
: to or at one's place of residence or home (see 1home 1a)
: to a final, closed, or ultimate position
: to or at an ultimate objective (such as a goal or finish line)
: of, relating to, or being a place of residence, place of origin, or base of operations
: prepared, done, or designed for use in a home (see 1home)
: operating or occurring in an area that is a headquarters or base of operations
: to go or return to one's place of residence or origin : to go or return home (see 1home)
: to return accurately to one's native area of place of birth or origin from a distance : to return home
: to move to or toward an objective by following a signal or landmark
A vacation home is a house that the owner uses only a few days or weeks per year.
Let's say John Doe lives in Minneapolis. He gets sick of the winters there and buys a house in Phoenix. He spends two weeks a year there and rents it out for five other months. This is his vacation home.
People can have more than one vacation home. Vacation homes are different from rental properties, which are more like business assets that the homeowners uses to generate income (rents) and capital gains (profit on the sale of the home).
Vacation homes are wonderful to have, but they present some financial challenges. For example, mortgages on second homes usually are more expensive because they are more likely to default. If the homeowner rents out the property, the property can become a business property, which creates opportunities to deduct rental expenses and other costs that could lower (or in some cases, increase) tax liabilities. The IRS considers vacation homes as personal residences the homeowner uses for at least 14 days per year or rents out to others for more than 10% of the year.
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