When one home is not enough, here's how to make a smart second purchase
- If you plan to live there for over half of the year, make it your primary residence
- Remember, your second home can appreciate and lead to higher-than-expected costs
- Because you've bought a home before, Home Savi could be a great fit for you!
It’s thrilling to be in a position where you can buy a second home. Whether you’re looking to get a beach house right on the sand, a cabin high in the mountains or a fixer-upper for investment purposes, here are some things to consider before making the final call.
Taxes differ depending on location
If you’ve been living in one place your whole life, it’s easy to forget that other regions may have much higher (or lower) property taxes. California and New York are two states known for their notoriously high costs, and states like Louisiana or Delaware may present relative bargains in comparison.
Also, remember that home buying expenses don’t end on move-in day. You must be financially prepared to take on yearly taxes on a new property in addition to your original residence.
Deducting interest might be an option
If you have two residences and plan to finance your second home, federal tax rules may allow you to deduct mortgage interest on both homes. Most states honor this rule, and it can help you save a sizeable amount in the long run. Consult a tax professional to learn more.
Beware of rising tax rates
Knowledgeable buyers purchase homes expected to appreciate in value over time. If you’re buying when the market is on an upswing, beware of your property taxes going up as your property appreciates. Another thing to keep in mind is increased property taxes due to government policies. These changes may be out of your hands, but it’s smart to be aware that they could happen.
Consider changing your primary residence
If you plan on spending more than just vacations at your second home, at least more than half the year to be exact, you may want to think about changing your primary residence. Living in a state for at least 183 days out of the year allows you to get that state’s tax exemptions.
Additional costs & fees
From HOA and maintenance fees to insurance, there are many extra costs to buying that second home. Make sure to investigate the additional fees of your property so you can budget and plan accordingly.
How Home Savi can help!
Home Savi replaces the need for a buyer’s agent by giving you the tools to offer, close and save on your home purchase. The money you save from representing yourself can be used to pay for the additional expenses of buying your perfect vacation home!