Buying a second home is an incredible way to open you up to a whole new level of life experiences. It can be your private getaway to give you sanctuary from your busy life. It can be a place to watch your kids play or host a visit of adult children and the cute grandkids. Or, it can simply be an investment.
Aside from how exciting it is to think of having a second home in a beautiful location, consider the following benefits of owning a second home, including:
- Tax Benefits
- Extra Income
Read on below!
Enjoy Significant Tax Benefits
It’s highly recommended to discuss these financial implications with your accountant since every situation can be different. Here are some tax benefits you can reap from owning a second home.
First, let’s start with a financially measurable reason – taxes. You’ve probably heard that this is a major benefit of owning a second home, but it may not be exactly clear how. That’s because there isn’t a one-size-fits-all answer, and it depends on how you use the property.
First, your house has to meet certain qualifications for it to count as a vacation home. It needs to have a kitchen, at least one bathroom, and at least one dedicated sleeping area. Past that, the rules will be different depending on whether it’s a second home for you or a rental property.
If it’s considered a second home, you can generally deduct the mortgage or real estate taxes.
This isn’t allowed if the home is considered a rental property, but you can often treat that in the same way as other business income. The interesting part is that the IRS counts a vacation home as a residence if you spend more than 14 days a year or more than 10% of the days it’s rented to others in the house.
Generate Income at a Rental Property
Second, renting out your second home can be a great way to offset the costs and make some additional income, but some homeowners worry that this means they won’t be able to enjoy the property. Fortunately, there are many platforms now making it easier than ever to rent for short-term vacation rentals, and there are many management companies who will take care of all the hard work for you.
Even if you don’t want it rented out full time, you can be generating rental income during the time when you’re not physically at your second house. And that will be even more profitable if it’s located in a beautiful mountain community.
Have Your Own Dedicated Vacation Spot
Whether or not you decide to rent it out, your second home will be a dedicated vacation destination. You’ll have control over when it is and isn’t available, and you won’t have to worry about any surprises on the quality when you arrive.
Simply pack your bags, invite your family and friends, and then make yourself at your (second) home.
Less Stress for Retirement
A mountain home means that’s waiting as soon as you finish your retirement party.
Whether you’re 40 years or one year away from retirement, the benefits of owning a second home mean you’re one step closer to the relaxation you deserve. Not to mention, there are some really great places to retire these days that you should always start looking forward to. When you don’t need to be within commuting distance to the office and on the route of the school bus, you might not want the hustle and bustle of your current neighborhood.
Wouldn’t you rather be relaxing in front of your fireplace while looking out the frosty window at a winter wonderland? Or setting the outdoor table for a relaxing dinner under the summer stars?
Have a Consistent Safety Net
It’s not a comfortable thought, but many of us worry about what we would do if some unexpected accident made our primary residence unlivable. Anything from a broken pipe to a natural disaster could leave you needing a separate roof over your head, so it can be a good feeling to know that there’s always something waiting for you.
On a similar but much more exciting note, a second home is perfect for spur of the moment getaways. Trying to find a last-minute spot in a ski lodge on a snowy weekend is going to be expensive at best, and usually requires a lot of effort just to find something acceptable.
But imagine having a feeling in the back of your mind that you could always throw a suitcase in the car after work and head to a mountain paradise.
Additional Homes Bring Additional Income
After the initial investment of purchasing a new home, it will likely pay back much more than you paid for your new house.
Rental income is an obvious way to make money off of it from the start, but appreciating property value is something you shouldn’t forget about. Real estate is consistently viewed as a safe investment, and that becomes even truer if it’s in a desirable location.
Great Legacy Gift
Last but not least, we all want to ensure that our family, especially our children, will be happy and safe when we’re no longer around to take care of them. Money and other investments are great to leave as an inheritance, but a second home comes with both financial and sentimental value. Your children and grandchildren will benefit from having another asset left to them, but they will always be able to sit inside of your nice house and think about the loving memories that were shared together in that home.
It’s a connection and feeling of security that won’t go up and down depending on a market.
Be Part of an Incredible Mountain Community
If you’re searching for a second home, Grand Park could be just what you’re looking for. Whether you live in Colorado and want a mountain getaway for weekends, or you live in another state and long for vacations in the Rocky Mountain air, it offers much more than just a piece of property. You’ll have fun neighbors, access to businesses that won’t make you feel isolated, and if the rest of Colorado is any indication, the value of the property is only going to increase as the state becomes more popular.
Please don’t hesitate to reach out if you’re interested in learning more about the benefits of owning property in the Winter Park area of Colorado.