Inman April 14, 2023
Seller
Helping a client purchase that lake place, ski condo or snowbird destination?
Or sometimes even more complex, a client considering selling the family retreat?
Vacation homes can be a lifelong goal for many families, but along with the fond memories made come a slew of financial and emotional implications.
And while it is not your job to know every line of the tax code, you are uniquely positioned as their agent to help them identify areas where they should give extra consideration or even loop in other members of their financial team for niche expertise.
So, if you have a client buying or selling a vacation home, here are the financial aspects they need to know.
The total cost of owning a vacation home is typically the driving factor in how much vacation home to purchase or for a client deciding to sell a property.
While we all know that homeownership costs more than simply principal and interest payments to the bank, the level to which additional expenses can mount for a vacation home can be surprising to homeowners.
Here are some common hidden expenses your clients should be aware of:
While stretching the budget to purchase the property might make sense in some circumstances, other buyers may be happier with a lower mortgage payment that leaves room in the budget for extra costs like housekeeping and yard maintenance that allow them to spend time at the vacation home being on vacation, instead of working on the vacation home.
Additionally, buyers of a second home will want to carry a higher emergency fund after their purchase.
Not only will the bank want to see a higher cash reserve from a financing perspective, but buyers will undoubtedly find themselves with a higher rate of “unexpected” expenses as the owner of an additional property.
As with any large financial transaction, taxes will need to be a primary consideration for your client.
If your client is on the selling end, likely their biggest concern is going to be gathering their costs basis to determine their long or short-term capital gain on the sale.
Stay up to date on the latest real estate trends.
Buyer
March 13, 2025
Buying your first home is exciting, but let’s be real – it can also feel overwhelming.
Lifestyle
March 13, 2025
As much as our stories are about ourselves, they are also a window into our ancestral past.
Buyer
March 13, 2025
At one point or another, you’ve probably heard someone say, “Yesterday was the best time to buy a home, but the next best time is today.”
Lifestyle
March 12, 2025
It is not uncommon to go on a vacation and wonder, “Why am I not living here?” While the U.S. only ranks 23rd on the World Happiness Report, there are pockets of happi… Read more
Seller
March 12, 2025
A new data report from Redfin (NASDAQ: RDFN) has reached the conclusion that the wealthiest 1% of Americans have the financial capacity to buy 99% of the nation’s home… Read more
Seller
March 12, 2025
Over the past 5 years, home prices have risen dramatically.
We Guide Homeowners through the complicated process of selling their home using our 4 Phase Selling Process and 3 Prong Marketing Strategy that alleviates their stress and moves them effortlessly to their next destination. Schedule a 15 Minute Complimentary Strategy Session Today