You’re enticed by the advantages of a vacation home: a place to stay without the hotel hassle, a travel destination to make your own, a retreat where you and your family can make memories. But there are several other benefits you may not have considered.
Chances are you or your family won’t be able to spend every day of the year at your vacation home. Many vacation home owners take advantage of these vacant periods by renting out their properties – particularly if the home is located in a popular destination. Rental income can offset – either partially or fully – the costs of your mortgage, as well as expenses like utilities, maintenance costs and homeowner association fees. It can even provide additional income.
Whether or not you rent out your vacation home, it may provide you with potential tax benefits. The way you divide the time between personal use and rental use of your vacation home will typically determine the extent of applicable tax benefits while you own the property. And when you sell the property, you may also be eligible for tax benefits. Consult with your tax advisor for details specific to your individual situation.
If a vacation home is in a growing community or increasingly popular area, it may be a sound long-term asset to add to your investment portfolio.