The Value of a Vacation Home
Everyone dreams of having a second home in their favorite getaway destination. It’s a place to escape the worry of bills, stresses of work, and shakes up your mundane routines. Maybe it’s a place in the mountains, somewhere secluded, or a condo by the beach. While all these things sound great, there are even more benefits that a vacation home can provide other than just a “getaway.”
Yes, it’ll increase your health, but have you ever thought about how owning a vacation home can increase your wealth? To help you visualize the potential, we have detailed a few of the benefits that come with this purchase.
Vacation Home Benefits
Before purchasing, it’s important to strategize and determine why you want to invest in a second home, pinpoint the location, and don’t delude yourself about costs and profits. A second home is an additional responsibility, make sure to do some thorough research and reasoning before you buy.
Flexibility and Comfort of Second Home
The idea of avoiding travel stress is great. You can enjoy a second home at your leisure. A survey done by The Realtors Association found that the primary motivation for a vacation home was, you guessed it, vacationing! Experts believe that this is the best way to approach the purchase, with enjoyment and comfort as a top priority.
A vacation home can potentially bring in new income if you decide to temporarily rent out your space. Although this may not be a sustainable income, it’s a good way to help pay for the mortgage. Before doing so, make sure you are eligible to deduct operating expenses. If you need help determining what you’re eligible to deduct, contact your tax professional and review the potential deductions on vacation homes.
Reduce Retirement Expenses
Purchasing a second home enables you to experience the benefits of a refuge before retirement. This can also be your potential home when you retire. By investing early, you can build equity and reduce mortgage debt on your current and retirement residence. When you retire, profit from your current home can even be enough to pay off the mortgages on both. This is all depends on the long-term approach you want to take after purchasing the vacation home.
New Tax Deductions
If you charge rent for occupancy for no more than two weeks per year, the interest on the mortgage and the property taxes are fully deductible from your gross income, per tax accountants. Or, if you spend at least 14 days a year in your vacation home, you get to deduct the mortgage interest on two separate homes for up to combined total of $1 million in mortgage debt. For example, if you owe $500,000 for one and $500,000 for the other, you can write off all of the interest payments.
For tax purposes, you can treat this mortgage the same way you would the mortgage on your primary residence. We suggest you consult with your tax consultants for more details.
Vacation in The Desert
So, is buying a vacation home a good idea for you? Although this may involve risks, paperwork, and management, buyers in leading locations have expressed their satisfaction about their decision. At Capitis, we offer prime residences that you may be interested in, from the perfect desert getaway in Palm Srpings, a retreat in Joshua Tree to a prime location on the beach! If you’re looking for an experienced real estate agent to help you with your search, we have agents in four different offices who are ready to help, find the best agent for your location here.
We also work closely with The Vacation Rental Tourism Association of Coachella Valley. This organization has made an effort to aid potential vacation home buyers with vital information about city regulations since 2008. They provide insight on neighborhood concerns, safety, and energy matters. To learn more about the rental regulations in the city you’re looking to reside in, click here.