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Can You Own 2 Primary Residences?

Your ability to obtain a mortgage depends on the kind of home you intend to buy. The property could be categorized as a primary residence, a secondary residence, or an investment property.

When buying extra properties, being aware of each classification might assist you avoid paying exorbitant loan rates and facing tax repercussions. You must understand how owning two families affects your taxes if you recently bought a second house or are considering doing so. You'll specifically want to know if you may deduct two primary residences from your taxes.

You cannot have two principal residences, to put it simply. You must choose which of your residences will be regarded as your principal residence before filing your taxes.

It makes financial sense to utilize all of the available tax incentives if you're considering purchasing a second property for vacations, rental income, or a potential retirement residence. Mortgage interest, property taxes, and rental costs can all be written off as tax deductions, which can dramatically lower the cost of having a second home.

Owning more than one house comes with its own set of special issues and worries, whether you're wanting to buy a second home for investment purposes, as a permanent holiday location, or to provide shelter for an elderly parent or grandparent.

Some people have more than one home because they want to sell their previous home after the housing market has recovered. Whatever your motivations, assistance is available for navigating these murky seas. Just make sure you have a reasonable house insurance coverage to protect you.


You can determine whether the house you're presently residing in qualifies as your primary residence in a few different ways. The following questions should be asked of oneself in order to decide which home should be considered your primary residence:

  • Where do you typically get your mail?

    What address does your driver's license indicate?

    Which residence is closer to your place of employment?

    What lesson does your tax return mention?

    In which state are your autos registered?

    Where do the majority of your relatives reside?

You need should have a clearer notion of where your main residence is after responding to these inquiries. For tax reasons, the ATO does not permit you to have two primary residences; nevertheless, if you own numerous residences, you may still be qualified for tax deductions.

How a primary residence is viewed by lenders

A primary residence is where you'll probably reside and spend the majority of your time. Mortgages for primary residences may offer the lowest interest rates and be easier to qualify for than those for other occupancy types.

Because homeowners are more likely to keep up with payments for their homes' roofs over their heads, lenders perceive them as properties.

The following requirements must be satisfied in order for the property to be considered a principal residence:

  • For the bulk of the year, you must reside in the house.
  • The house must be close enough to your workplace for commuting purposes.
  • Within 60 days of the closing, you have to move in.
  • If you refinance the mortgage on your primary residence, you must be able to provide evidence proving your residency (e.g., tax returns or government identification).

A principal residence is a primary location that a person inhabits, also referred to as a primary home or principal place. As long as it is where a person, couple, or family household resides most of the time, it doesn't matter if it is a house, apartment, trailer, or boat.

The mere fact that a property is owned does not imply that it is a primary residence. In the same way, furnishing a home with furniture and other belongings does not automatically make it a principal residence. For tax reasons, the taxpayer must satisfy certain requirements, including using and leasing or owning the residence for a certain period of time.

A person's main residence is the house they live in. Your primary residence for most of the year can be an apartment, a houseboat, or another type of property.

The best mortgage rates are often available for primary residences. Here are certain conditions that must be met in order for your house to qualify as your primary residence:

  • You must spend the majority of the year there.
  • It must be close enough to your workplace for you to use it.
  • Documentation proving your residence is required. You can use your tax return, voter registration, etc.

A primary residence has some elements that are tax deductible. On loans up to $750,000, homeowners can already deduct mortgage interest. Both the primary and secondary dwellings may be included in this sum. If you bought your house after 2006, you can also deduct your mortgage insurance payments. You must itemize your deductions rather than claiming the standard deduction if you decide to include these deductions on your tax return.

One property may qualify as your primary residence. You and your spouse must both list the same property as your principal residence if you're married.

Additionally, after purchasing the home, you have 60 days from the closing date to move in. While you are on active service and the loan is originated by the VA, your spouse may fulfill the occupancy requirement.

Within six months of closing, the property must be designated as an investment property if you want to turn it into a rental or investment property.


How a second property is defined by lenders

Your home will probably be categorized as a second home if you wish to purchase a vacation home. Whether or whether a property qualifies as a second home relies on how you intend to use it, not on whether you've ever purchased or already own one.

If your home satisfies the following criteria, it will be regarded as a second residence:

  • You must occupy the home for a certain period of the year.
  • The house cannot be covered by a timeshare, rental, or property management contract.
  • The property must only be under the borrower's control.
  • The house must be a one-unit residence and be habitable all year round.

TIP: Keep in mind that the location of the home can influence whether it is seen as a second home if you don't intend to live there permanently. If you pick a location that is too close to your primary residence, it can be considered an investment property, which could result in more stringent qualification standards and higher mortgage rates.

A second home is a house you plan to live in addition to your primary home for a portion of the year. A second house is typically used for vacations, but it can also be a place you routinely visit, like a condo in a city where you usually do business. In order to be eligible for a second-home loan, the property frequently needs to be close to the borrower's primary residence or in a resort or vacation location, such as the mountains or near the seaside.

Loans for second homes typically have lower interest rates than loans for investment properties, and they typically come with a Second Home Rider in addition to the mortgage. Typically, this clause states:

  • The property will only be used by the borrower as a second residence, which he or she will occupy.
  • that the property will continue to be available for the sole use and enjoyment of the borrower at all times.
  • The property cannot be included in any rental pool or time-sharing arrangement.
  • Any arrangements requiring the borrower to rent the property or giving a management company (or any other person) authority over the occupants and use of the property are prohibited.

You might need a better credit score to be approved when buying a second property, and you might also be charged a higher interest rate because the lender is taking a bigger risk. Lenders will examine your financial statements and assess your loan-to-value (LTV) ratio. You might be required to make a sizeable down payment depending on the lender's LTV ratio requirements.

However, since every circumstance is unique, neither of these things may actually occur. These qualities must be present in a second home:

  • You must reside there for a portion of the year.
  • It must only be in your possession and unencumbered by a rental, timeshare, or property management contract.
  • Additional limitations apply.

The property must be reachable by automobile throughout the year. Your Dr. Evil-style hideout on a volcano's side that can only be accessed by helicopter won't be accepted, even though it's cool.

It can be rented out for up to two weeks while still earning tax-free income. You must record the income if you rent for 15 or more days, although you may be able to write off some expenses, like rental costs. It's vital to keep in mind that there may be specific restrictions on how frequently you can rent the property from either your lender or the investor in your mortgage.

If the house is rented out for no more than 180 days in a year, it can be considered a second home. You must occupy the property for the majority of the 180 days, or for 10% of the days you would typically rent it out.

Second houses are also eligible for the mortgage interest tax deduction, but you need to be careful if you're renting out the property. You must utilize the house for more than 14 days, or more than 10% of the days you would typically rent it out, to be eligible for the deduction, whichever is greater.

The Benefits and Drawbacks of Owning Two Homes


Moving costs may be tax deductible in certain situations. The ATO outlines criteria for when you start working, how distant your new home is from your workplace compared to your former home, and how long you have been working since moving. Before purchasing a second home, we strongly advise checking with a tax expert to fully comprehend how this affects your ability to write off moving costs as a tax deduction.


The ATO does grant you tax deductions if you own numerous homes, even though you might not be able to declare multiple primary residences for tax purposes. You can deduct the mortgage interest, home equity loan interest, and insurance premium payments you make on your second property as long as it is used for personal purposes by both families. You must see a tax expert if you want to take full advantage of your tax deductions.

The Bottom Line

Owning a second house, if it is financially feasible, can be a great investment for a holiday or rental purposes as well as a suitable principal residence after retirement. But because having a property comes with a hefty price tag—from the mortgage and taxes to maintenance and repairs—in it's your best interest to understand the tax repercussions of owning a second home.

On your loan application, you shouldn't give false information about how you want to use your house or how you intend to rent it out. Lenders will check the occupancy of your property both during and after the underwriting process, so you won't be the first to think of ways to deceive them.

Lenders used to pay workers to knock on doors to make sure that borrowers were truly residing on the property. However, lenders now have more advanced and high-tech techniques to confirm occupancy. Lenders can identify applicants who could have been misled on their mortgage application by using data analysis and algorithms. Whether your addresses differ from those listed on loan applications can be ascertained using information from utility bills, tax records, and credit agency files.

Make sure the purchase of extra properties makes financial sense if you're thinking about it. Find the best course of action by consulting a tax expert and a lender.

It's important to keep in mind that when you buy a second property, you may need different homeowner's insurance, liability insurance, mortgage insurance, or landlord insurance requirements than you would for your primary dwelling.

The finest coverage alternatives for your second home's needs and goals are always recommended by knowledgeable, independent insurance agents, and they can even help you submit a claim. The added costs and insurance requirements can be perplexing, but owning a second home can be exhilarating. You do not have to struggle alone.

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