If you're considering purchasing a Red Deer real estate property to turn it into your vacation home, you may need to think about it carefully. First of all, you have to understand that buying a second home might just be an extra expense on your part. As such, you really need to assess your reason for purchasing a vacation home. By thinking about your decision carefully, you'll be able to make a reasonable and economically wise choice.
Before you purchase a vacation home, you have to determine whether or not it is a necessary expense. Big decisions like this one require careful planning because if not, it just might do a huge impact on your life. Here are some of the things you need to know about buying a second property:
Pros of Owning a Vacation Home:
- If you frequently visit a location, it may be good to think about purchasing property there. This way, you no longer have to rent out an expensive hotel room for the night.
- One of the good things about owning a second property is that you get to enjoy tax advantages. However, this is dependent on how you will be using the property. If you simply buy the home for personal use, you might be able to deduct interest on its mortgage payment. But if you plan on making money off the property by leasing it, this advantage is not applicable.
- If you plan on having someone rent out the property but for only a few days (no more than 15 days a year), you can avoid income taxes imposed on it.
Remember that tax law is a very complicated topic and that it frequently changes. Make sure you speak with a tax advisor or your accountant before you make a final decision about buying a second property.
Cons of Owning a Vacation Home:
- Among the biggest disadvantages of owning a vacation home is the maintenance that you will need to spend for its upkeep. A large portion of the time, it will be left vacant. But because you need someone to look after its maintenance chores and security, you need to hire someone to stay in the property while you're away.
- A loan for a second property may end up being more expensive as it is a very risky move. There are even some that will require you to pay between 30% and 40% down when you purchase the property. If you do decide to turn the property into an income generating option, you might end up paying up to 2% points higher than your primary residence.
Carefully decide whether buying a second home is a wise move for your current financial situation. Also, think about how often you'll be staying in the property so you can decide if it is an investment you're willing to make. If you are serious about purchasing a Red Deer home for sale, make sure you give us a call today. We'll help you choose the right property that you can call your vacation home.