Buying a second home- Living the dream
It used to be that most people didn't buy a second
home until they
sold their first one. But times have changed and more and more people
are realizing that it might make more sense than they had originally
thought. There are a couple main reasons why people buy
a second home, to get away from the day-to-day stress now or in some cases
later, by saving it for retirement. And the other reason is the investment
opportunities. Whatever your priority, be it peace of mind, or financial
gain, or both, for that matter. Owning a second
home may be the right
choice for you and your family.
There are so many tax advantages, you may not be aware of all of
them. You can write off 100% of the mortgage
interest, and you can
write off property taxes. New
IRS rules allow for a capitol gain on the principal
residence whenever people sell. Up to $250,000 for
singles, and up to $500,000 for couples. Living in your second home
for two years or more, entitles you for the same capitol gains break.
If the return on your investment bears more than the bank interest
will pay you, then you just made a smart investment.
Another thing to consider
is that you have the option to rent in order to cover your second
mortgage. You need to decide if you are going to declare
it as a vacation home or rental
property though, because the IRS has different
rules for both. Also remember that if you declare it as a rental your
mortgage could be slightly higher. So the benefits include tax breaks,
a getaway for the family on vacations or holidays, a future retirement
home, renters making your mortgage payments for you, or just a smart
investment. On the downside, there is a second house payment, potentially
higher mortgage if declared as rental property, and some hassle in
upkeep involved. Just make sure to look at all your options and every
angle to see if this is the right move to make for you. |
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