Tips and Tricks for Snowbirds

Whether you’re an aspiring snowbird or have been escaping the perils of brutal New England winters for years now, there are some simple money-saving and stress-reducing tips to ensure that your second home experience is as rewarding as possible.

If you are taking time now to look to purchase a second home to enjoy a little rest and relaxation, there are financial considerations to be made prior to a sales transaction. First and foremost, make sure that you indeed enjoy the location you are planning to invest your money in because your second home is not merely a vacation destination. You will be spending time in that location for years to come so make sure it is the ideal setting for your lifestyle and budget before you invest in property. Key things to consider when you are looking for a second home include market value, the safety of the area, accessibility, nearby amenities, quality health care and nearby banking resources.

Once you have settled on the perfect location for your very own getaway, take all the necessary steps to ensure it’s a financially viable decision or you will very quickly end up regretting that purchase before you can enjoy it. For starters, accept the reality that a second home entails all the same bills and maintenance as your primary residence does -- water, gas and electrical fees. To financially manage a second home, many snowbirds offset their costs by renting out their primary or secondary home while they are away. Home safety is another added benefit to finding temporary tenants. Proper research into the local housing market is suggested so that you maximize your homeownership experience, stimulate financial rewards and minimize stress. If you wish to forego the renter’s route and leave one of your residences vacant for an extended period of time, look into what advantages may result from suspending cable, phone and other services. Be sure to have all your mail forwarded and keep a constant eye on the property. Consider installing security monitors and an alarm system, and encourage your neighbors to contact you if they see anything concerning. You may also want to ask a friend or handy man to check your vacant home every 2-4 weeks to ensure appliances are functioning properly and the home is secure. There are home watching services that you can now hire for weekly visits which range from $20-$40.

To manage expenses easily in both locations, consider setting up direct deposits and online banking for remote access to finances. Establish automatic bill payments, as well. Ideally, your bank will have locations in each state in case you need to transact in person; if not align with a smaller bank in your secondary location to avoid or lower fees.

In terms of taxes, if you’ve substantially moved from one state to another, you’ll want to see if you’re eligible to file taxes as a domiciliary of that new state. Switching from one state to another can also have an impact on your nest egg, especially when it comes to taxes, so you will want to contact your lawyer or tax professional to learn the rules and benefits for each state. For example, nine states have no state tax on ordinary income and some states offer property-tax exemptions. For your vacation home to qualify for a residence tax deduction you’ll need to spend at least two weeks a year there or 10 percent of the time the property is rented for. This shouldn’t be too difficult if you’ve chosen the ideal second home!

There are many ways in which snowbirds have successfully owned and managed a secondary home for years. As baby-boomers see retirement on the horizon, we will likely see an influx of second home sales. Follow these tips and seek market-specific, relevant advice from your realtor, property manager and financial advisor to perfect your transition into second-home-ownership.