The Primary Second Home

The well-named Narcissus Executive Desk ($6,200) is
a welcome tax-deductible addition to one's home office.

Many wealthy people have a primary home and a secondary (aka "vacation") home. The coronavirus-caused exodus from the cities and the boom in working remotely have created a new real estate term: the primary second home. [bold added]

Buyers are looking for second homes where they can comfortably camp out for months, and in some cases, forever. They are not just driven by fear of an extended pandemic. As many firms—especially tech companies—embrace remote working, people are taking the opportunity to untether from astronomically priced cities and get more space, scenery, and quiet...

While some buyers want to be close to big cities, the ability to work from anywhere has encouraged others to look in remote areas, said Kevin McDonald, an agent with Sotheby’s International Realty in northern Sonoma and southern Mendocino Counties. Estates with a vineyard or winery component—anywhere from 1 acre to thousands—are now in high demand, he said.

“It’s similar to the rush to grab toilet paper and people grabbing the biggest ones they can find,” Mr. McDonald said. While most buyers are looking for second homes, they want “the potential of shifting to primary residences.”

I'm guessing that many upper-middle-class telecommuters also have a tax motivation.

The 2017 Tax Act limited the State and Local Taxes (SALT) itemized deduction to $10,000. Typical Bay Area homeowners have already exceeded that limit because of property taxes (at least 1% of the home's purchase price) and State Income Taxes. The tax benefits of owning a second home become low or nonexistent because its property taxes are not deductible, and deductions on mortgage interest are heavily restricted.

If the second home becomes the taxpayer's principal place of business, however, much of its expenses--property taxes and mortgage interest plus insurance and utilities--now become deductible. Perhaps wealthy executives and professionals would have made the decision to purchase anyway, but it can't hurt to trick out the second home so that the taxman is on your side.