Property Taxes on Second Homes and Vacation Properties
TL;DR
Second homes and vacation properties are assessed and taxed just like primary residences, but they do not qualify for homestead exemptions in most states. This means you pay the full assessment without the tax breaks that primary residence owners receive. In some states (Florida, Michigan), second homes are also subject to higher assessment growth limits. Property taxes on a second home are deductible on your federal taxes, but they count toward the $10,000 SALT cap along with taxes on your primary home. You can appeal the assessment on a second home just like your primary residence.
No Homestead Exemption
The biggest tax difference between a primary home and a second home is the homestead exemption. Since homestead exemptions require the property to be your primary residence, second homes do not qualify. This can mean significantly higher taxes:
| Feature | Primary Home | Second Home |
|---|---|---|
| Homestead exemption | Yes | No |
| Assessment cap (FL, MI, etc.) | 3% (FL) or 5% (MI) | 10% (FL) or uncapped (MI) |
| School tax exemption (MI PRE) | 18 mills exempt | Not exempt |
| Tax rate | Same | Same (but some jurisdictions have higher rates for non-homestead) |
State-Specific Considerations
- Florida: Non-homestead properties have a 10% annual assessment cap (vs 3% for homestead). No homestead exemption or portability.
- Michigan: No Principal Residence Exemption, so you pay the full 18-mill school operating tax. Taxable value is not capped.
- South Carolina: Second homes are assessed at 6% of market value (vs 4% for owner-occupied).
- Vermont: Non-residential education tax rate is higher than the homestead rate.
Federal Tax Deduction
Property taxes on a second home are deductible under the SALT deduction, but combined with property taxes on your primary home and state income taxes, the total is capped at $10,000. For homeowners in high-tax states, this cap is easily exceeded.
Rental Use
If you rent your second home, you can deduct property taxes as a rental expense on Schedule E. Rental property taxes are not subject to the $10,000 SALT cap because they are a business expense, not a personal deduction.
Whether it is a vacation cabin or a beach condo, check the assessment on your second home with our free property tax analyzer. Without a homestead exemption, making sure the assessed value is accurate matters even more.
Frequently Asked Questions
What should I know about property taxes on second homes and vacation properties?
Second homes and vacation properties are assessed and taxed just like primary residences, but they do not qualify for homestead exemptions in most states. This means you pay the full assessment without the tax breaks that primary residence owners receive. In some states (Florida, Michigan), second homes are also subject to higher assessment growth limits.
What should I know about no homestead exemption?
The biggest tax difference between a primary home and a second home is the homestead exemption. Since homestead exemptions require the property to be your primary residence, second homes do not qualify. This can mean significantly higher taxes:
What should I know about federal tax deduction?
Property taxes on a second home are deductible under the SALT deduction, but combined with property taxes on your primary home and state income taxes, the total is capped at $10,000. For homeowners in high-tax states, this cap is easily exceeded.
What should I know about rental use?
If you rent your second home, you can deduct property taxes as a rental expense on Schedule E. Rental property taxes are not subject to the $10,000 SALT cap because they are a business expense, not a personal deduction.