The house in the film, as in the original The Amityville Horror (1979) movie, is not the actual house as depicted in the best-selling novel, as that dwelling was unavailable to shoot in for both films. The home in both movies was a Colonial style replica situated in Toms River, New Jersey.
According to an interview with George Lutz at website Horror.com, (Lutz' twenty-eight days in the real-life house provided the base for The Amityville Horror (1979)), Lutz wanted this sequel to be based on John G. Jones' book "The Amityville Horror Part II". However, producer Dino De Laurentiis, in conjunction with American International Pictures, made this sequel based on Hans Holzer's book 'Murder in Amityville". Lutz sued De Laurentiis but was unsuccessful but was successful in getting a disclaimer put on posters that read "This film has no affiliation with George and Kathy Lutz".
Even though the Montelli family is based on the real life DeFeo family, there are a few creative liberties taken. For example, the movie shows the family just moving into the home at the film's beginning and being murdered weeks later, when in real life, the DeFeos had lived in the home for about 10 years prior to the murder. All of the children's ages were correct for the most part, but one of the sons was omitted from the movie; the Defeo family had three sons and not two as the movie shows. Some of the family drama did actually happen but is exaggerated. The incestuous relationship between the older siblings was based on Ronald and Dawn's rumoured incestuous relationship. The older son was also shown to be a clean cut and average young man, where Ronald DeFeo Jr was a drug addict with a criminal background.
Principal photography began March 8, 1982 at the same house in Toms River, New Jersey that the previous film used. After two weeks on location in New Jersey, unlike The Amityville Horror (1979), studio shooting was done in Mexico City for eight or nine weeks at Estudios Churubusco Azteca S.A.
After director Damiano Damiani's original cut was shown to test audience, several scenes had to be cut out for various reasons, one of them being the negative reaction of audience on the scene where Anthony anally rapes Dolores and scene where Sonny and Patricia have incestuous sex. This scene was added into the script by Damiani who wanted to really upset the viewers. Original scene was lot more graphic and sexual, while in the movie it cuts to the next scene right after Sony starts kissing Patricia. Some other deleted scenes were shown on lobby cards and stills for the movie, like the scene where Anthony is sitting outside the house drinking and cleaning the gun and scene where Jan is pushing Mark's head under the water while he is in the bathtub. Theatrical trailer also shows shot of Jan and Mark looking at the window and holding hands. Only deleted scene which was ever released in some form is so called "Lost Souls" scene where souls that are within the house appear in front of Adamsky during the ending of the movie and he blesses them. No actual footage was released but UK special collector's edition DVD includes several stills from this deleted scene.
It is often debated whether or not the film is actually a prequel or sequel to The Amityville Horror (1979) as the depicted family massacre contradicts the opening of the first film as the family is awake and chased around the house by a possessed Sonny with the bodies removed in the morning when it is well known that the family was murdered in their sleep with the bodies removed in the middle of the night. The events of the first film and George Lutz and Kathy Lutz are also mentioned in the film's tagline as having been preceded by this film despite being full of elements that are clearly from the 1980s, such as a miniature "Walkman" radio/headphone set and the presence of 1982 cars, televisions, etc.
In this film Sonny, based on Ronald DeFeo Jr., kills his family due to being a victim of demonic possession. The real Ronald DeFeo Jr. however, never actually made a defense that he was possessed and that the voices told him to do it as stated in the first film.
Ed and Lorraine Warren, famous paranormal investigators and demonologists whose stories inspired The Conjuring films, served as demonology advisors for the film. The Amityville case was their most infamous investigation and was adapted for the opening scene of The Conjuring 2 (2016).
The trivia item below may give away important plot points.
The explosion sequence at the end of the movie was a real special effects explosion utilizing a particular type of highly flammable chemical which explodes flames that burn out immediately. However, the special effects explosion didn't quite go as planned and burnt one side of the house.