March 3rd 2020

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. Therefore, it’s important to educate yourself on all the costs before you jump into your purchase.

IRS Limitations

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 and burglary. 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. If you need a reference, don’t hesitate to reach out to us!

Other Expenses

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. However, if you rent your home right, you can afford all these expenses while still making a profit!

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. 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.

If you’re planning to use your second home as a full or part-time rental, The Coastal Marketing Group can get it ready, listed, and making you money by this summer. 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 us a call at (609) 884-4242 or visit our website today.