Today is the first day of summer, and temperatures are climbing across the country. Whether the weather will be fairer by the beach or in the mountains, many will seek respite from the heat at their vacation homes. As you pack for a summer getaway, you might ask yourself: can I secure a homestead exemption for a vacation house?
States generally limit the homestead exemption to property owners’ primary residences. Vermont specifically excludes vacation or second homes from the definition of homestead property. There, only homes that are a person’s principal dwelling, occupied for a minimum of 183 days out of the year, qualify as a homestead. Even if you plan on spending a majority of the year in Vermont, a dwelling is not considered a homestead for a portion of the year it is rented to another person.
New Jersey extends a homestead property tax credit only for the principal residence of an owner domiciled in New Jersey.
Utah specifies that vacation homes, cabins, and time-shares are not eligible for the primary residential exemption, which allows an exemption of 45 percent of a primary residence’s fair market value. However, for those seeking alternative vacation plans, Utah considers a yurt to be personal property, even if used for residential purposes.
Without a state property tax exemption for a vacation home, coupled with the new federal limit on SALT deductions, people may think twice before buying or investing in a vacation home.
Continue the discussion on Bloomberg Tax’s State Tax Group on LinkedIn: Do you consider the tax impact of buying or investing in a vacation home?
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