Second home purchase tips
Unfortunately, second home purchases require even greater care than buying your first home.
- Shop for a second home as you would shop for any home — seek an asset with appreciation potential and future marketability.
- Get to know the area. Hire a Realtor® intimately familiar with the community, its amenities and resources. Consider first renting in the area from time to time to get to know the area.
- Use mortgage lenders and brokers who work the area. They know the market and can price competitively. Seller financing may be available from older owners who own properties outright and are willing to carry a mortgage for the extra income. Co-ownership, say with another family, is another financing option, provided the deal includes a carefully worded contract with shared-use and property-disposal provisions.
- Don’t count on rental income from the property to help you pay the mortgage unless the property is highly desirable in a popular destination. Tax-wise, renting can be tricky. You can rent your second home for any amount, tax free, for 14 days or less in any calendar year. Once you rent the property for 15 days or more, however, it becomes an investment property and a complex set of rules apply based on the housing type and how often you rent it.