A vacation home is a second home that is often viewed as a luxury item, and not an investment. However, the many personal, as well financial benefits make this purchase especially favorable and appealing, particularly due to a highly active housing market. Choosing where to buy a vacation home will largely depend on where you currently live, your budget, and whether you plan on renting out the property when you are not using it yourself.
1. Rental Income
Owning a second home offers you an excellent opportunity to rent it when you are away or not using it. And if your vacation home is located in a desirable area, you can turn into a rental property and benefit from a second source of income. And in certain instances, you can subtract expenses associated with renting your vacation home.
2. Long-term Profits
Even though all assets vary in value in the short term, vacation homes are more probable to sustain their value and rise further since they are usually located in popular locations with geographically restricted supply.
But properties, just like bonds, stocks, and other similar investments have always swung regarding value and will probably continue doing so later on, so it best to be mindful of that.
3. Tax Capitalization
For the majority of homeowners, their home is their major tax break – and this can be true for a vacation home as well. A lot of people who are second homeowners choose to keep them vacant when not being utilized for personal purposes. If you charge rent for tenancy for no longer than two weeks each year, the mortgage interest and real estate taxes will be completely deductible from your gross income. In simpler words, for taxes, you can take care of this mortgage in the same manner as you would the mortgage on your first home.
4. Retirement Prep
Whether your vacation house is on a lake, nearby a beach, or in the mountains, there is a good possibility that it will eventually become your retirement home if you buy it with the intention of selling your current house later. Buying it today can help pay off in the present-day cheap dollars. Years from now, when your neighbors and friends will be struggling to buy a place, you will have a completely furnished dream house, upgraded and paid for.
5. Convenience and a Sense of Familiarity
The ability to easily store items that are used exclusively in your vacation home minimizes the hassle associated with packing and traveling.
Plus, returning to the same place after some time can be quite comforting as you become accustomed to the location. It offers you the independence to be yourself and a chance to broaden your long-term relationships with fellow residents.