Owning a vacation home sounds exciting. The thought of slipping away to your own private getaway sounds so inviting. But proceed with caution. Owning another piece of real estate brings with it the added responsibilities and costs of maintaining the property.
Before You Buy
If you think you are finally ready to own a vacation home, use the following list of questions to evaluate your motives. Keep an open mind and be brutally honest.
- Are you buying on emotion? This is the hardest hurdle to get over. Sure, everyone wants a vacation home, but if you are letting your emotions take over you may not be ready and willing to accept the responsibilities that go along with it.
- Are you buying with the idea that it is an investment? Rental income and tax benefits will rarely offset the costs of owning the home. If you are lucky, the home will appreciate enough so that the price you paid, and other expenses, may be recouped.
- Are you counting on some major tax breaks and deductions? This should not be a factor in your decision. You may get some added tax benefits from owning and renting out the vacation home, but it should not be your primary motive. A vacation home is a psychological investment, not a tax shelter.
If you answered yes to one or more of the questions, reevaluate your decision to purchase a vacation home. Maybe you're not ready for the additional costs and responsibilities. It is also possible that you had some misconceptions about what it means to own a vacation home. If you are feeling unsure, read further to discover what it really means to own a vacation home.