Should I Buy a Vacation Home?
A critical component to the overall answer is personal based on one's own financial landscape and goals.
That aside, Where? and ask yourself "Why" ?? are you thinking about buying a vacation home. The obvious is for personal enjoyment more than likely. But perhaps the focus is more for investment purposes or a place for a permanent retirement haven in a few years, in which case can put you ahead of the game now.
There are some tax benefits such as mortgage interest and property taxes which are deductible and help to offset the house payment. If you treat the second home as a rental property, you can fully depreciate it, as well. You are required to occupy it for two weeks per year or 10% of the total rented time, whichever is less.
Before jumping into buying a second home, ask yourself if you can afford two mortgages, maintenance and additional utility costs. Also, you should become knowledgeable about finaincing requirements for a second home because it can differ from requirements on a primary residence. The cost of homeowner's insurance for a vacation rental property vs. a long term rental property may vary substantially.
Best advice I have is to consult with a tax advisor, mortgage specialist and a Realtor who knows the "local market" area of interest to you before taking the leap. Even though you may have a great real estate agent friend with your primary home, I strongly suggest you work with one who is local to the market where you want to buy.
Second home markets are not the same as the primary markets, sales have a few more ebbs and flows but there is an ever increasing trend toward vacation home purchases. Prices and interest rates are low in the North Georgia Blue Ridge market and it is still a great time to buy. We have a little bit of everything to suit almost everyone here! Beautiful lakes, mountain ridgetops, log cabins and small towns!
Donna Yates
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