With the sizzling month of July heating up and summer vacations top of mind, owning a vacation home can be enticing! But beyond the allure of a tranquil retreat, there are a range of benefits of owning a vacation home aside from the dreamy views and rest and relaxation.
From potential rental income and tax benefits to the opportunity for property appreciation and a tangible investment for your future, we will explore the advantages of owning a vacation home. Discover how owning a vacation home can enrich your life, provide financial opportunities, and become a cherished asset for years to come!
And you are not alone in your vacation home dreams! In 2020, NAR estimated vacation home sales outperformed total existing-home sales– based on information gathered from the monthly REALTORS® Confidence Index Survey and NAR’s existing-home sales.
A Personal Retreat
Owning a vacation home allows you to break away from your daily routine and immerse yourself in a different environment. Whether it’s a cozy cabin in the mountains or a lakeside retreat, your vacation home offers a change of pace and scenery, helping you disconnect from work and responsibilities. This escape allows you to recharge and return to your everyday life with a fresh perspective.
Unlike staying at hotels or resorts, where you share common spaces with other guests, owning a vacation home gives you privacy, a sense of familiarity, and predictability. As your personal haven, you can customize it to your preferences, equipped with the comforts of home. You can personalize the space with all of your favorites, from furniture and decor to recreational toys and all the things that fill your cup.
A personal retreat in the form of a vacation home contributes to overall well-being. It offers a space where you can prioritize self-care, engage in activities that bring you joy, and indulge in hobbies or interests that you may not have time for in your regular life. Whether it’s reading a book by the fireplace, practicing yoga on the deck, or taking long walks on the beach, your vacation home can be your place of rejuvenation and self-discovery.
Rental Income Potential
The expenses associated with owning a vacation home, such as mortgage payments, property taxes, insurance, and maintenance, can add up. Renting out your vacation home allows you to cover these costs using the rental income you receive. It essentially transforms your vacation home into an income-generating asset, reducing the financial burden of ownership.
Beyond offsetting expenses, renting out your vacation home can potentially generate a profit. Depending on the demand and rental rates in the area, you may be able to charge a premium for your property during peak seasons or special events. If managed effectively, the rental income can exceed your expenses, providing additional income or a return on your investment.
Online platforms like Airbnb and VRBO have made marketing and managing vacation rental properties even easier. These platforms provide a streamlined booking process, secure payment systems, and access to a broad customer base. By leveraging these platforms, you can efficiently market your vacation home to potential renters and easily handle reservations and communication.
Appreciating Real Estate Market
Investing in a vacation home, specifically in Idaho, can be a good financial decision due to the local appreciating real estate market. Over the past decade, home values have steadily increased with the surge of people that relocated to Idaho. By purchasing a vacation home in Idaho now, you can enjoy its benefits and have the potential to build equity and experience property value appreciation in the long run.
Factors such as local market conditions, economic growth, infrastructure development, and tourism trends can contribute to property appreciation. As the value of your vacation home increases, so does your equity in the property.
The specific advantages and eligibility criteria may vary based on individual circumstances and local tax laws; you may be able to deduct certain expenses related to your vacation home, such as property taxes and mortgage interest. Property taxes paid on your vacation home are generally tax-deductible. By itemizing your deductions on your tax return, you can include the amount of property taxes paid during the tax year, which can help lower your taxable income.
If you rent out your vacation home for a portion of the year, you may be eligible for various tax deductions related to the rental activity. Deductible expenses can include advertising costs, property management fees, repairs and maintenance, insurance, utilities, and depreciation. It’s essential to keep accurate records and consult with a tax professional to ensure compliance with tax regulations.
When you own a vacation home and use it personally, tax rules generally require you to divide the expenses and usage between personal and rental use. The number of days you personally use the property compared to the number of days it is rented out can impact the deductibility of certain expenses. Understanding the specific rules regarding personal use limits is crucial to maximizing your tax benefits.
It’s essential to consult with a tax professional to understand the specific tax advantages available to you as a vacation homeowner in Idaho.
While owning a vacation home has many benefits, we would be remiss not to recognize disadvantages such as time commitment and financial responsibility.
Expense – Buying a home is a significant expense, and adding one to your budget requires serious consideration and planning.
Maintenance cost – Aside from the mortgage, you’ll also need to budget for utilities, insurance, property taxes, maintenance, and possible HOA fees.
Limited travel– Owning a vacation home will most likely mean you will want to use it to the fullest. This means you will be tied to one vacation spot and may not have as many opportunities to travel to new places.
From the ability to escape to your personal retreat whenever you desire to the potential for rental income and tax advantages, owning a vacation home can provide a sense of freedom, financial opportunities, and a tangible asset that can appreciate over time. And luckily, we live in a beautiful state that offers the perfect opportunity to have the best of both worlds, a home away from home!