On just about every vacation that I go, there will be a time when I say that I would love to have a vacation home there. Most people would if they could. There are pros and cons associated with owning a vacation home.
The biggest benefit is that you have somewhere to stay when you go on vacation. You don’t have to worry bout condos or hotel rooms. The property is yours and you can go whenever you want and stay as long as you want.
You can treat them as investment properties. Many people do. Many people went rent the vacation home throughout the year to help pay for the mortgage and maybe even make some cash. You won’t be staying there all the time, so why not rent it out to make some money and pay the bills. If you stay in the home quite often, you will not be able to deduct depreciation to shelter the profit that you have made. If I remember correctly, this applies if you stay in the property longer than 10% of total days rented. I do know of investors that use the benefits of the 1031 exchange. The idea is that you will sell the home when you no longer need it. That way taxes are not a problem. What you can do is just trade one vacation home for another, no problem with taxes. This is also a great time when your accountant can give you all the details on how to do everything properly and avoid any penalties.
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