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Purchasing a holiday home may not only provide benefits to you and your family on long weekends and holidays, but may also be a great investment opportunity moving forward. Whilst some obvious considerations when purchasing a holiday home may include it’s price, locations and features there are some additional considerations we would recommend taking into account.
Purpose
Having a holiday home is lovely, but many holiday home owners eventually sell due to it’s lack of use, it’s important to be realistic about how often the house will be used. Understanding how often you and perhaps your friends and family will use the property will allow you to consider other options, such as renting the property out as a holiday house during periods of limited use.
If you do end up renting out the property, you should try to determine when the peak periods are for holiday goers in that area. If you’re selecting a coastal area, for example, you may experience a lull outside of summer. If your family also plans to enjoy the holiday home during this period, you’ll need to factor the limited rental income in your budget. If your holiday home is located near a beach than it is more than likely the peak period for holiday goers in the area would be summer.
Upkeep
As well as the price of the home, additional expenses such as garden maintenance, property management furniture will be essential for the family or any guests. Before moving pieces in, you’ll also need to determine whether repairs or renovations are needed to ensure it’s safe and inviting, particularly to safe guard yourself against and liability if you are renting out the home. In considering all of this, purchasing a holiday home that is not far away for your place of residence is preferable to ensure you can easily manage and maintain the property.
Location
Whilst it is important to pick a location that you and your family enjoy, picking the right location can save you from low occupancy in the winter months if you are renting out your property. Try to pick locations near restaurants, cafes, shopping centers and tourist hotspots. Furthermore, by buying in a town or city that has major infrastructure nearby the level of tourist activity is likely to remain much more consistent given the town is likely to have been established as a holiday destination for many years.
Tax Implications
When buying a holiday home and rent it out, you must declare the income in your tax return. If you use your property for your own purposes and operate it as an investment property you will need to convince the Tax Office that the property is a genuine investment. Whilst we can not provide financial advice, we would recommend contacting your accountant to better understand the taxation implications of a holiday home.
Structural integrity
Just like any other property you purchase it is important to make sure that the structure of your home is up to scratch, and that it is free from any asbestos, mold, termites and other defects. Call Jim’s Building inspections on 13 15 46 for a free quote.
