Have you ever thought about owning a second home? Perhaps a cottage on a lake or a chalet near a ski area is a goal or dream of yours? It might even be a boat, provided it meets the IRS criteria as a second home. The question you need to ask is “am I ready and able to own a vacation home?”
I owned a vacation home once, and at that time in my life, it provided weekends of fun and relaxation on a lake in New Hampshire. It sometimes caused stress and financial burden too. For instance, once a tree fell on the roof and caused some significant damage. This is not an easy situation to handle when you live 100 miles away. And when you close it up in the fall, you never know what you will find when you reopen in the spring or “who” has been living there.
So let me share some of the benefits and pitfalls of owning a vacation home. Then you can decide if it’s right for you.
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The obvious benefit is that a vacation home provides an escape from the hectic pace of everyday life. Pack up the car on Friday night and off you go for a fun filled weekend.
There are potential tax benefits and deductions that can be taken with a second home. Follow the guidelines that the IRS offers regarding qualifying second homes. When in doubt, check with your tax professional to get a better understanding of your deductions.
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It is an investment, and like your principal residence, could result in increased value over the years.
There are always projects in the vacation home, and if you would like to become a qualified do-it-yourselfer, then it’s a great place to practice and learn how to do things you might eventually need to do at home. Small carpentry projects, plumbing repairs, and the like, are commonplace in a vacation home.
On the downside is the potential for your vacation home to drain your finances with maintenance and repairs. Just like at home, taxes and association cost can increase. Even the cost of going there could increase with the cost of gasoline.
Just like in the movie “Field of Dreams”, if you build it they will come, well, with a vacation home, if you own it, you must go. If it’s there, there is an expectation that you must use it. So you will go to your vacation home and perhaps you didn’t handle a home project or attend a back home activity that was important to you.
When I owned my cottage, it was truly a place to relax, unwind, socialize with friends and neighbors, get a tan, and get in better shape through physical projects and recreational activities. I owned it for 7+ years, and regretted selling it when I did for financial reasons. My kids were disappointed at the time and still will comment over 25 years later “I wish we still had the cottage”. At least they still have the memories of the fun times.
In making your decision, think about the things I’ve outlined above. Weigh the plusses and minuses and hopefully you will have your answer. Good luck and enjoy!
About the Author: Roland Spadafora is one of the Broker Owners at RE/MAX Legacy. Roland has experienced the fun and frustrations of owning a vacation home. He can be contacted through his website at www.spadaforateam.com
