If a second or vacation home is on your mind, yet you’re deciding whether to make a purchase with doubts, it’s time to investigate what the process entails. Luckily, this is easy to do if you keep four steps in mind when making your choice. Let’s look at what they are …
Step #1: Deciding Whether it’s the Right Time to Buy
One major component in deciding whether to make a purchase is making sure that it’s the right time to buy a second or vacation home in the first place. This decision comes from a variety of assessments, including:
- Deciding your goals. Are you making an investment or do you want a place to vacation or retire?
- How is the market? Does it make sense to buy right now if prices are going up?
Step #2: Knowing What to Look For
Next, it’s advisable when deciding whether to make a purchase to do some of the following:
- Rent first. Before committing to a second or vacation home in an unfamiliar area, it doesn’t hurt to rent first to decide if the area is really what you want.
- Communicate with locals. Try to determine from residents how they feel about the area – and if they have any home recommendations.
- Look at home sales in the area. It’s good to also look at home sales stats to see how easily you can resell if needed.
Step #3: Financing Options
If you use a realtor to purchase a second or vacation home, the process will be much like that of purchasing your primary home. However, if you choose to negotiate directly with a seller getting rid of their second home, you might be in luck because they often get rid of property at a cheaper rate. So when deciding whether to make a purchase, its good to throw this consideration into the equation.
Step #4: Understand Taxes
When buying a second or vacation home, it’s good to know that they are often tax deductible, especially if you rent them out. However, you may have to pay capital gains tax. To determine tax implications, it’s good to consult with a tax professional.
Deciding whether to make a purchase like a second or vacation home can be challenging because there is so much to consider. But with careful consideration, you can make a good choice for yourself.