Log In   ·   Become A Member

To Buy Or Not To Buy A Vacation Home?

Rocco A. Carriero

You've always wanted to own a vacation home, and now you finally feel ready to make that purchase. Before you put an offer in for a cabin on the lake or condo in the mountains, consider the realities of owning a second property. Here are a few questions to think about before you finalize your plans.

Can you afford it?

Owning a second home entails additional expenses such as:

 • Furniture or other household items
 • Travel costs like airfare or wear and tear on your vehicle
 • Annual repairs or improvements to the property
 • Recreational desires such as a boat, winter skis or kayaks
 • Utilities including heat, air conditioning, water, internet and cable if you choose to have it
 • A security system for when you're away

If your primary residence is more than a few hours away from your vacation home, or if you plan to rent out your vacation home, you also may need to hire someone to manage the property.

Is the location right?

Naturally, you have an idea of where you'd like your vacation home to be located. But, have you given much thought to what that means in terms of year-round use? Homes in areas where temperatures dip below freezing need to be winterized and monitored to avoid frozen pipes. Where there's snowfall, there's shoveling and plowing to manage. Distance is also a key consideration, along with the relative ease of getting there. Have you chosen a location and property that will grow in value or will it be hard to sell when the time comes? These are all important questions to answer as you consider purchasing another home.

Would renting be a better option?

You don't have to buy a vacation home to get away on a regular basis. A short-term rental property can provide the comforts of a home without the obligations of ownership. Rather than be tied to one place, you can try new locations and accommodations when you take a vacation. You can search online for everything from barebones apartments to sprawling homes, with rental options by the day, week or month. Alternately, if you do move forward with the purchase of a vacation home, you may want to explore listing your property as a rental when it's not in use. If your vacation home is in a high demand area, you might be able to generate an income stream — but don't forget to factor in the costs of managing the property from afar.

How will your taxes be affected?

Different tax rules apply to owning a second home, which can be somewhat complex depending on a variety of factors. Whether or not you rent the home, property taxes and mortgage interest are a few items that could affect your tax return. You'll want to consult with a tax advisor to sort out the details and discuss how your taxes will be affected if you purchase another home.

There are a lot of factors to think about before purchasing a vacation home. Consider working with a financial professional to determine how buying a second home will affect your longer-term financial plan.


Rocco is a Private Wealth Advisor with Ameriprise Financial Services, Inc. in Southampton, NY. He specializes in fee-based financial planning and asset management strategies and has been in practice for over 20 years. Advisors is licensed/registered to do business with U.S. residents only in the states of NY, NJ, TX, MA, PA, NC, NH, UT, NV, CA, NM, WA, VT, MS, MD, RI, FL, MO, SC, GA, MN, CT, AZ. Ameriprise Financial Services Inc., and its representatives do not provide tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation. Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. www.roccocarriero.com


Be the first to comment on this article. (Just fill out the form below)
 

Submit Your Comment

Please note, you are not currently logged in. Your comment will be submitted as a guest.
To submit your comment as a member, please click here.
Your Name:
Location:*
Comments:*
* Comments will be reviewed and posted in a timely fashion
* All fields are required
Question:*
What color is the sky?
(For spam prevention, thanks)
 
 
 
http://www.hamptons.com/gallery/ads/2362.gif
http://www.hamptons.com/gallery/ads/2003.gif
Southampton Masonry-Visiting the Southampton or the Wainscott locations is an exciting experience.
Southampton Masonry has been serving Long Island's masonry and tile needs since 1975. Delivering quality products from Manhattan to Montauk for over three decades. The company's continued success is due primarily to their number one priority: customer satisfaction, with a promise of prompt and courteous service from the professional, knowledgeable staff. Southampton Masonry has the largest inventory on the east end. As direct importers they can offer a large variety of the finest quality products at the most competitive pricing for both your interior and exterior projects.

Burner Law Group, P.C.
Burner Law Group, P.C. are full service elder law attorneys concentrating in the areas of Estate Planning, Trust and Estate Administration and Litigation, Special Needs Planning, Guardianship and Elder Law. Offices in East Setauket‚ NY, Westhampton Beach, NY, and New York, NY.

New York Title Abstract Services, Inc.
We are a title insurance services company dedicated to promptly delivering fully compliant and accurate reports, and title insurance, for residential and commercial real estate throughout New York State. Headquartered in the Hamptons, our professional team has extensive real estate experience and understands the business from all sides including title insurance, legal, sales, governmental, banking, and lending regulations.

Aimee Fitzpatrick Martin, Licensed Associate Real Estate Broker
Considered a West of the Shinnecock Canal expert with a 5-star Zillow ranking, Aimee specializes in the luxury and waterfront markets in Quogue, Westhampton Beach, Remsenburg, East Quogue and Hampton Bays. With exceptional communication skills and a buttoned-up approach to every deal, she is highly skilled in the art of the negotiation process. Understanding the nuances of buying and selling waterfront homes, especially on Dune Road, is a specialty.