Owning a second home is a big responsibility, but there are advantages to owning a second home as well. Buying a house as a second home offers some tax advantages, and the house itself has potential as a vacation property. Your second home can even figure in to your retirement plans, giving you the perfect place where you can retire.
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As long as you spend at least 14 days per year at your second home, you can deduct the interest you pay on your mortgage from your taxes. This deduction assumes that your second home is a personal property and not a rental. If you rent it for more than 14 days a year, it is considered an investment property instead. You can still deduct a portion of your expenses from a second home that is rented, but only for the portion of the year that it is a rental.
A second home in a city you often visit or near a beach or attraction you enjoy saves you both time and money when it comes to finding a place to stay. You don't have to worry about hotel rules and restrictions or checkout times, and you never have to worry about the room you want not being available. Having a dedicated vacation property also allows you to take spontaneous vacations with your family without having to spend time figuring out where to stay.
Many homeowners use their second home as a retirement property, selling their primary home once they reach retirement age and making the second home their primary residence. Using a second home as part of your retirement plan allows you to buy your dream home years in advance and spend the time until retirement fixing it up or decorating and remodelling it as you wish. Once it becomes your primary residence, the money you get from the sale of your other home gives you a nice buffer for a comfortable retirement.
If you only plan on using your second home for a certain portion of the year, you can sell fractional usage rights to let others make use of the property when you're not there. Selling these rights by creating a timeshare agreement or even renting the property, turns your second home into an additional source of income. Keep in mind that this may affect your ability to claim tax deductions on the property, so weigh the potential income against your deductions before you sell usage rights.
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