Buying a second home is a great way to lock in a great vacation spot and earn some extra rental income. However, there are also some financial realities that many homeowners aren’t aware of before they purchase their second home.
If you rent your second home more than fourteen days a year, the IRS qualifies that home as a rental/investment property. As such, the income you gain from your home is taxable. Your second home also won’t qualify for the same deductions as your primary home.
Risk & Liability
It’s easy to overlook problems like leaks and water damage in a home that goes unoccupied for long periods of time. Empty homes are also more likely targets for vandalism. Hiring a property management company to keep an eye on the home can help ensure you catch potential problems before they get out of hand.
Expenses such as home insurance, security monitoring fees, and running utilities can add up in your second home. On top of these costs, you have annual maintenance costs and repairs that will inevitably pop up over the years.
Understanding the expenses involved with owning a second home is an important part of purchasing your next home! That way, you can make a plan. Vacation rental services like Airbnb make it easy to cover the costs of owning a second home or even profiting from it. You can also use remote monitoring technology, such as video doorbells, access control systems, and environmental monitoring to minimize the risk of missing important developments while away from your home.
Buying a second home is a great investment, but one that you need to be well informed about before you commit yourself. For more information about buying a second home or an investment property, give me a call!