Is it Time for a Vacation House?

Owning a vacation home is a fantastic luxury for those who can afford it and are able to take advantage of it. It makes planning vacations much easier as it negates the stress of finding the perfect place to stay, it means that you will feel at home even while on vacation, and it means that you will always have a place to go if the need to leave arises.

So, the question is, is now a good time for you to invest in a vacation house?

*Can You Afford It?

This is the very first question you should answer before deciding to look for a vacation home. If you are not prepared to take on the full cost of ownership of a vacation home, then this could become a financial nightmare.

Financing, maintenance, and insurance are all costs that need to be considered before purchasing a vacation home. Insurance, in particular, may be higher than you expect due to the location of your vacation house. Vacation destinations often have higher insurance rates as they have an increased risk of being affected by natural disasters.

*Where do you Want to Go?

Location is one of the most important factors to consider when looking for a vacation home, and not just for the local amenities. A vacation home is similar to your regular home in that it should be treated as a long-term investment. As a result, you are going to want a vacation home that will retain its value over time, and that you are going to want to stay there for a long time.

Additionally, location is going to determine how frequently you visit this home. Locations within driving distance are more likely to be often visited, while a vacation house far away from where you live may only be visited as little as once or twice per year.

*Decide Whether or not You Plan on Renting Out your Home

Vacation homeowners often decide to rent out their homes when they are away. Renting out your vacation home can help pay for maintenance and financing expenses, and, depending on how much you plan on charging, could lead to you making a profit off of your home.

If you are interested in this, you should know that not all properties will allow you to rent out your home. Your homeowner association may prevent you from renting your home to strangers, so it is important to know all the rules that apply to your vacation home.

Whether or not you plan on renting out your home is important to consider before purchasing a vacation home as it will help you create a clearer picture of the financial implications of owning a vacation house.

*Understand the Tax Implications

A vacation home will almost certainly have a significant impact on your yearly taxes. For example, mortgage costs and taxes on your vacation home may be tax deductible. Additionally, if you decide to go the route of renting out your home, you will most likely have to report income from rental fees.

Of course, it is best to consult with a tax professional to fully understand what you will be responsible for when April comes around.

Law Office of Chris Albanese
July 20, 2018