There are many things to take into account when considering buying a second home. Here we will address some considerations to make.
Today’s second-home buyers are more interested in enjoying their property rather than getting a quick return on their investment. Still, you should consider that you will be away from the property a lot of the time, which usually entails additional costs, such as having a management company check the place in your absence for water leaks, frozen pipes or other problems. Getting insurance for a second home may be more challenging than it is for a primary residence. If you are considering a second home on the beach, for instance, you’ll need flood insurance, in addition to regular home insurance. It has become more difficult to get flood insurance in coastal communities, and the cost has increased exponentially in some markets.
Consider the tax implications of your purchase. If you use your home as a true second home, you could get a deduction for mortgage interest and property taxes, just as you do with your first-home mortgage. Be aware that the Tax Cuts and Jobs Act caps to the mortgage interest deduction at $750,000. So, if you already have a $750,000 mortgage and get a loan for a vacation home, you won’t be able to deduct the interest on the second mortgage. If you rent out your second home, you will have to consider additional tax ramifications, particularly if the rental period extends beyond 14 days a year.
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