Suppose you stay in your second home for more than 14 days in a year and rent it out fewer than 15 days a year. This makes it your second personal residence. You can deduct mortgage interest and property taxes on your Schedule A just as you do for your first home. Interest deductions on your first and second home mortgages are limited to the first million dollars of mortgages. If you rent only 14 days or less in the whole year, you don't have to declare the income. Rent 15 days or more in a year and the rentals become taxable income. If you rent out your cottage half a year and stay there three weeks, you can claim 50% of the mortgage interest in taxes as an itemized deduction. If you collected six months of market rate rentals, you can subtract 50% of your annual interest, tax expense, association fees, depreciation, insurance, maintenance and utilities. You can't take a loss from income but you can carry forward any remaining loss expenses to the next year. Note: if you rented six months and stayed in the house for three months, you could deduct 67% of the expenses. If you rented it out for all but 14 days a year, you would be able to deduct all of the expenses, subject to the limitations mentioned above. See your tax accountant before planning any of the above.