Post details: Owning a Vacation Home - Part 2

02/17/05

Permalink 11:26:59 am, Categories: Articles, 540 words   English (US)

Owning a Vacation Home - Part 2


Look for Potential Problems

One of the features that attracted my father to the home we bought was a spa room, which included a hot tub and a sauna. Unfortunately, the previous owners of the house did just about everything wrong with the hot tub, including allowing the water inside it to freeze a few winters ago.

The hot tub, once a selling point for us, has become nothing but trouble. We've spent more time having it fixed than we've spent relaxing in it. The hot tub started having problems again the week before our vacation began. Now, it seems, it will take $2,500 to fix the problem -- but the maintenance guy says he can't guarantee that the repairs will stick.

So do we spend $2,500 to fix a problem that might return or pony up more than $8,000 to replace the tub? I'm still debating that one, and not happily.

Don't Plan to Make a Bundle on Rent

The management company we use is more expensive than average. It charges 50 percent of the rental income in exchange for booking rooms, collecting payments, arranging maid service, and the like. It's a high price to pay, but we use the company because it's located right in the development, and it gets a lot of renters.

The one advantage to the high cost is that, between the management company's fees and all the other expenses needed to run the house, no matter how often the house is rented, it will always operate at a loss. That should mean some big deductions come tax time.

Get a Good Accountant

There are tax pluses and minuses with a vacation home. On the negative side, if you rent out the property for more than 14 days a year, that income is taxable and could put you in a higher tax bracket.

But on the positive side, you can deduct mortgage interest, property taxes and a slew of other expenses that you pay throughout the year to keep the house up and running. Depending on how much you use the house, there are limitations on what you can deduct. So even if you usually do your own taxes, consider hiring a tax pro at least for the vacation-home portion of your return.

Know Your Partners

Say a friend of yours is interested in sharing a vacation home and all of the expenses with you. That may be great financially, but you have to ask yourself if you really like this person. You'd better -- because when you both want the house for Labor Day weekend, who gets first dibs?

I bought our house with family members; we actually all like each other, and we often spend time at the house together. But I know lots of other families who don't operate that amicably.

Plus, because everyone is an equal owner, you have to put up with each other's quirks. My sister tolerates the needed quiet when it's time for my daughter to go to bed, and I bite my tongue when she leaves her fuzzy puppy slippers in the living room after she's done with the house for the weekend.

Karin Price Mueller is the author of Online Money Management (Microsoft Press, 2001).

Better Homes and Gardens

FIND HELP FOR THIS PROJECT

Permalink

Trackback address for this post:

http://homeservices-directory.com/blog/htsrv/trackback.php/172

Comments, Trackbacks, Pingbacks:

No Comments/Trackbacks/Pingbacks for this post yet...

Leave a comment:

Your email address will not be displayed on this site.
Your URL will be displayed.
Allowed XHTML tags: <p, ul, ol, li, dl, dt, dd, address, blockquote, ins, del, a, span, bdo, br, em, strong, dfn, code, samp, kdb, var, cite, abbr, acronym, q, sub, sup, tt, i, b, big, small>
URLs, email, AIM and ICQs will be converted automatically.
Options:
 
(Line breaks become <br />)
(Set cookies for name, email & url)










Click to shop Home Depot.

FREE MAGAZINES!
New Year 120x90


FREE CATALOGS!
Holly Cats Why - 120


EASY LOANS!
LowerMyBills.com

Categories


powered by
b2evolution