1. Where’s a good place to buy? Choosing where to buy depends largely on where you live, what you can afford, and whether or not you will rent out the property when you’re not using it. So before saying “I do,” give it some serious thought.
2. Can you afford to buy a second home? Crunching the numbers is a crucial first step for anyone who’s thinking about buying a second home. Otherwise, that dream vacation getaway could become your worst financial nightmare.
3. Is it a smart investment? Recent figures from the National Association of Realtors show an upward trend in the number of second homes purchased for investment purposes, with rental properties outnumbering vacation homes by a wide margin. Property values do fluctuate, of course, but sinking a portion of your net worth into residential real estate can be a great way to diversify your portfolio.
4. How will a second home affect your taxes? Just like your primary home, a vacation home is likely to have a major impact when April 15 rolls around. According to the National Association of Tax Professionals (NATP), mortgage interest and property taxes on first and second homes alike may be claimed as Schedule A deductions, but to avoid unfriendly encounters with the IRS, buyers should be aware of some important differences in the way second homes are taxed.
5. Are time shares or joint ownership good options? Although time shares may be bought and sold like any other form of personal property, the Federal Trade Commission warns that sellers typically get less than the original price, so brace yourself for what could be a considerable loss if you have a change of heart.