Tax Benefits of Owning a Second Home in Florida

Tax Benefits of Owning a Second Home in Florida 

Owning a second home in Florida is more than just a lifestyle choice, it can also come with valuable financial advantages. From potential deductions to long-term investment strategies, the tax benefits of a Florida vacation home make the dream of owning property here even more appealing.

Whether you’re considering a beachside cottage in Sanibel, an island retreat on Captiva, or a Gulf-front condo in Fort Myers Beach, here are the top tax benefits to keep in mind.

1. Mortgage Interest Deduction

If you finance your second home, the mortgage interest may be deductible, just like your primary residence. The IRS allows interest deductions on mortgages up to a certain limit, which can significantly reduce your taxable income.

2. Property Tax Deductions

Florida homeowners can deduct property taxes on both primary and secondary residences. While Florida doesn’t have a state income tax—a major draw in itself—federal tax laws allow you to deduct property taxes paid on your vacation home, subject to annual limits.

3. Rental Income Opportunities

If you rent your vacation home for part of the year, you may qualify for tax advantages:

• Fewer than 14 days per year: Rental income is tax-free.
• More than 14 days: Rental income must be reported, but you can also deduct expenses like maintenance, utilities, management fees, and insurance.

This can be especially valuable in high-demand vacation areas like Sanibel, Captiva, and Fort Myers Beach, where weekly or seasonal rentals are popular.

4. Depreciation Deductions

If your second home is used as a rental property, you may also qualify for depreciation deductions over time. Depreciation allows you to recover part of your investment each year, further reducing taxable income.

5. No State Income Tax in Florida

One of the biggest advantages of owning a home in Florida is the lack of state income tax. Whether your second home is for personal use or rental income, you won’t pay additional state income tax, which makes Florida one of the most tax-friendly states for property owners.

6. Potential for 1031 Exchange

For investors, a 1031 exchange allows you to defer capital gains taxes when selling an investment property, as long as the proceeds are reinvested into another qualifying property. If you use your Sanibel, Captiva, or Fort Myers Beach vacation home as a rental, this strategy can be a powerful wealth-building tool.

The Bottom Line

Florida’s combination of sunshine, lifestyle, and tax benefits makes it one of the most attractive places to own a second home. And in Southwest Florida, the added bonus is owning in some of the state’s most desirable coastal destinations.

Thinking of buying a second home in Southwest Florida?
Contact Wendy Kirschner to explore properties that fit your goals—and maximize your investment.