Are you considering buying a vacation home? If so, take a few moments to review a few basic questions and answers that can help guide your decision.
Buying A Vacation Home
1) Where is the best place to buy?
There are many factors that go into choosing where to buy a home or vacation property. Some of those include where you live, how much you can afford, and how you will be using the property. According to the National Association of Realtors 80% of vacation-home buyers choose locations within driving distance of where they live. This is particularly relevant if you are planning on using the property frequently.
2) Will the area suite your future self?
When buying a second home, it is important to consider the long-term. It is recommended to buy a home that will accommodate for changes such as family growth. It is also advised to choose an area with a range of recreational opportunities to accommodate evolving activities.
3) Can you afford to buy a second home?
One of the first and most important steps in buying a second home is speaking with a bank and financial advisor. Understanding your finances and budget helps you understand the true cost of owning a second home. Beyond the actual sale price, there are other costs such as closing costs, insurance, and maintenance to keep in mind. Before moving forward with anything, crunching numbers and evaluating your finances is a priority.
Many second home buyers are investing in properties to be used as rentals. Recent figures from the National Association of Realtors show an upward trend in the number of second homes purchased for investment purposes, with rental properties outnumbering vacation homes by a wide margin. It is important to look for a property that you would enjoy but would also be ideal to rent out. Experts say the most desirable spots are near oceans, lakes or rivers, or at mountain recreation areas. It is also important to educate yourself about the area as well as the local zoning and building laws.
5) How will a second home affect your taxes?
According to the National Association of Tax Professionals (NATP), mortgage interest and property taxes on first and second homes alike may be claimed as Schedule A deductions, but to avoid unfriendly encounters with the IRS, buyers should be aware of some important differences in the way second homes are taxed. If you rent your property out for 15 days or less in a given year, the IRS will consider it a personal-use property and owners do not have to report anything. If the property is rented for more than 15 days, however, all rental receipts must be reported to the IRS as income. Operating expenses such as utilities, repairs, insurance and management fees can be deducted against the rental income, with deductions allocated according to the number of days the property was rented versus the number of days it was reserved for personal use.
So, What’s Next?
If you are ready to take the next step or just have more questions, call us today! We are experts in Adirondack vacation property for sale. We take the time to understand your needs, goals and dreams for your vacation home. From there, we will work to create a schedule viewings that are convienant to your schedule.