Who would not enjoy a holiday home on the lake or a little cabin in the woods
? A vacation home is so much more than just a place to visit once per year. Although the economy may not be what it once was people are still finding ways to travel and take those holiday trips. Investing in a holiday property to let is like putting money in your pocket. There are many benefits to purchasing a second home.
Tax Breaks
Homeowners who purchase a second home are entitled to various money-saving incentives in the form of tax breaks. For example if you rent the property for two weeks or less you do not have to report the income on your tax forms. More than two weeks and you are considered a landlord and the money is classified as income and must be reported. You may also deduct up to 50% of the homes expenses such as half the mortgage and utilities as a rental property.
Cash Flow of a Second Income
If you buy a property in a popular tourist location you can expect to be booked solid for many months during the spring and summer time. This can be quite a nice little nest egg for generating money for savings or for use in an emergency. You could also just choose to market the property strictly to let and have the security of a second income to carry you through those slow months.
Vacation Home away from Home
Another benefit to owning a holiday property is having a place to stay when traveling or on vacation. No need to book an expensive hotel when you have a nice home complete with linens, dishes and cooking facilities. Just bring food and your travel itinerary. Many people would rather rent an apartment or house than stay in a hotel due to the expense and close proximity of other travelers.
Building Equity
You have equity in the property same as in your first home. The longer you keep the property and make improvements, the more equity you have invested in it. This equity may help you get a home improvement loan in the future.
Buying for A Cheaper Price
Buy when the market is down and get a good price. Many properties can be had for a fraction of the original price. You may be able to use some of the equity in the first home to finance the holiday home.