Are
you thinking of buying an Illinois property as a second home, perhaps as a
vacation residence, a rental property or an alternative place to live near your
family? A second home can be a great investment, can improve your lifestyle and
can bring you rental money. However, there are a number of things that you need
to keep in mind when you are buying a second property.
Do Your Research
Don’t
get too carried away with the idea of a second home in a specific area, before
you have actually done your research and learned about that area in depth. Even
though it is your second property, it is still a major investment so it makes
sense to do your homework first.
Don’t Forget The Extra Expenses
When
you own two properties, you will also have to pay twice for electricity,
insurance, taxes, repairs, utilities, furniture and much more. Make sure that
you factor in the additional expenses
of owning a second home so that they don’t catch you by surprise.
Watch Out For Higher Interest
Rates
Did
you know that interest rates on second home loans are often higher than the
rates for primary residences? This might only be a quarter of a percentage
point, but this can really add up over the lifetime of the loan. If you are
able to come up with a larger down payment you will be able to reduce the total
interest on the loan and save yourself a significant amount of money over the
years. Renting Out Your Property
If
you are planning on renting out yoursecond home when you are not using it, you will want to do some research on
this in regards to your taxes. In particular, read the “Home Mortgage Interest
Deduction” and the “Residential Rental Property” publications by the IRS. This
will help you to understand the different tax codes on rental property. If you
rent out your second home for more than 15 days per year, you will need to
report the rental income but you will be able to deduct expenses such as
maintenance and cleaning.
Buying
a second home is a major decision, so make sure that you take all of these
factors into consideration before you make your final choice. If you need any
more advice involving Illinois property, feel free to contact me at 1-888-279-1778 or email me at Aubra@AubraRealtor.com.
Aubra@AubraRealtor.com
Aubra@AubraRealtor.com
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