Interest rates for a vacation home you plan to use yourself are generally the same as for your full-time home. Interest rates for second homes purchased as investment properties are higher. Some banks require a larger down payment for a vacation home purchase, but that requirement seems to be loosening up as more people buy second homes.

The Internal Revenue Service has many rules that apply to vacation home ownership. Here are a few that are important:

• The IRS allows you to deduct mortgage interest for a second home, but not a third home.

• Capital gains taxes are due on the sale of vacation homes.

• You must list income and expenses for homes rented more than fifteen days in a year.

• You cannot deduct rental expenses if the home is rented for less than fifteen days during the year, but the rent need not be included in your taxable income.

Always talk with a tax professional about the full implications of buying or selling a vacation home.