If you’ve ever dreamed of
owning a second home, it’s never too early to begin planning how to make that
dream a reality. Whether you’re ready to buy now or think it may be a little
while before you make the move, there are several key considerations that will
inform your “second home strategy.”
1. Identify why
you want a second home. What role will this
second home play in your life? Is it designed to be a family retreat? Are you
hoping to supplement your income with a cash-flow positive rental? Is your second
home going to be a retirement destination? It could be all three, of course,
but you’ll want to understand the unique requirements each situation dictates.
This will include location, tax impact, and the home’s amenities.
2. Begin with your
location. Many second home purchases are made for
seasonal reasons, with many flocking to the south and the west for winter
months. This may be the norm, but it might not be so for you. Where do you want
to be? Have you experienced the location first hand, or is a visit in order? If
you imagine kids and grandkids making the journey to share this home, will it
be conveniently located?
3. Eyeball the
upkeep. You may think you want a 3 bedroom apartment lot
with a spacious balcony or terrace, but imagine paying to maintain that big
space for all the time you’re not in your second home. Mitigating your exposure
to upkeep can be an important factor in holding your second home for the
long-term.
4. Figure out
financing. This is especially important if you don’t have the
financial picture ironed out yet. Securing a housing loan for a second home can
be tricky, and a number of buyers look for all-cash purchases of relatively
inexpensive homes. Regardless of how you do it, financial planning is a must.
5. Talk taxes. How
a second home impacts your tax picture is a vital part of a second home
strategy. The tax implications can vary widely depending on how you choose to
utilize the home, whether for personal residency or as a rental. Even how long
you choose to rent out a second home each year can have unique tax
implications. Laws change, so take the time to review your strategy
periodically with your accountant.
Credit : +Ramprasad Padhi
Mumbai Properties
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