Secondary Home in your future?

Has summer in the city left you wishing for an escape to paradise? You’re not alone! Over 5% of housing units sold in the nation are second homes. The most popular locals for second homes include counties in Florida, California, New Jersey, New York, Texas, Delaware, Michigan, South Carolina, Nevada, Massachusetts, Illinois, and Arizona. Some 900 counties have 10% of the houses classified as second homes.

Second homes include both vacation properties and investment properties. Each type of home comes with it’s own set of tax laws. Vacation property mortgages are typically tax deductible but if you rent your vacation home out for more than 15 days, you will need to report it as income, but you can then deduct operating expenses such as utilities, repairs, insurance and management fees.

Checked your finances and think you’re ready to commit to a second home? Here are some tips to make sure you get the getaway of your dreams. Check the housing market you want to buy in. It could be very different from the market your primary residence is in. Make sure you are buying in an area where your property appreciates with time. Use an experienced area Realtor. Talk to your prospective neighbors to see how they feel about the area. Investigate alternative financing for second homes and learn your tax demands for the property. Be confident in the actual monthly cost of owning a second home. Remember maintenance, up keep help (landscaping, maid service), utilities, and homeowner association dues, where applicable, will need to be paid on your second home, too.

Other considerations include how far away you want it to be (most people have theirs within driving distance). How will the property and the area change over the next several years?  How flexible is the area to changes you may go thru? For example – are there resources to explore different interests or does the area only cater to tourist who enjoy fishing? Finally, if you do decide the property isn’t your dream, how hard will it be to sell it or rent it out? From more information take a look at these articles from HGTV including information on purchasing a second home in the tropics.