There is a difference. A second home, for tax purposes, really isn't one that we rent out more than, say, two weeks of any years. Conversely, we only stay in an investment property for the brief time it takes to do repairs each year. (Check with your tax advisor on how to approach these matters.)

And yet...a second home can indeed prove to be a great investment, just as your primary residence can. If indeed it qualifies as a second home for tax purposes, then you will enjoy all the tax benefits you get with your first home, including deductibility of mortgage interest and property taxes (within specific potential limits) and extremely liberal exemption from taxation of gains when you sell the home.

For most people, the second home is usually a vacation home...and often a home that they are likely to move into full-time when they retire. For some, a home may move rather fluidly from being an investment property one year into becoming a second home another. With good advice, the homeowner can make the most of ownership benefits at different times during the years s/he owns the home−during the different phases of his and her own life. For good real estate advice call Beth at (425) 450-5208 and visit her website at www.bethbillington.com.

Beth Billington is a Realtor® with Coldwell Banker Bain in Bellevue, WA.