You can buy a vacation home today for investment purposes as well as enjoyment. And
yes, there are tax benefits.
Some people buy a vacation home to use until it becomes a permanent retirement
home later, which allows them to use the higher income before retirement towards their payments
and reduce or eliminate the mortgage altogether. Another benefit is that the
interest and property taxes on a vacation home could still be federally tax-deductible
depending on your specific situation.
Some real estate experts predict that vacation homes will appreciate in value due to
rising demand from the aging Baby Boom generation. You also can depreciate the
property if you live in the house less than 14 days a year, with limitations.
You also need to consider whether you can afford to carry two mortgages, pay for the
extra utilities and maintenance costs, and how this investment fits into your
total personal financing picture.Under the current
IRS regs, you can own two homes that each qualify for personal residence
exemptions - something to consider and look into with your accountant/CPA to see
if it looks beneficial in your personal situation. You can also rent this our,
but you also have to use it. Those guidelines need to be checked out so you
don't disqualify yourself from gaining the benefits that could be otherwise
afforded to you.