Many people who love to travel to Florida on a yearly basis may be in the market to buy a second home that they can use as a vacation rental. Instead of letting your Florida home collect dust while you’re away, you can capitalize on it and rent it out to people looking to have some R&R in Florida. By renting out your second property, you’re helping to cover all of the expenses that are accrued for the home including the mortgage and property taxes.  

How To Buy A Second Home

It’s a big decision just to buy a first home. Buying a second home can seem like quite the feat. All of the same rules apply to buying a second home as that of buying your first home. The only difference is that you’re taking on a more significant financial responsibility. You’ll need to complete the following steps:

• Get your finances in order
• Have a down payment saved
• Shop for the best mortgage rates
• Find a real estate agent 

Look At Your Financial Picture

One of the essential steps in buying a house is making sure that all of your financials are in order. It’s really important to make sure that you can afford the extra expense of owning a Florida vacation home including: 

• Mortgage
• Property taxes
• Insurance
• Cleaning fees
• Management feeds

You’ll need to do a considerable amount more research when it comes to owning a second home. Pricing everything out and making sure you have a system in place to manage your home while you’re away is critical to your second home being a success. 

If you can, you should definitely look at the option of obtaining a mortgage for your second home or paying cash. The cash option is better as it will be one less monthly payment to fund. 

Second Homes And Taxes

Usually, one of the first things that people think about in the financial benefits of owning a home is that of tax breaks. Second houses can be used as a benefit for your write-offs or as additional income you must account for. These benefits are where owning a second home gets a bit more complicated. It may be wise to speak with a tax professional to help you better understand how possessing a Florida vacation rental will affect your financial picture. 

Selling A Vacation Home 

When you’re selling a vacation home, keep in mind that you’ll need to pay capital gains taxes. While it’s often easy to sell a vacation home in a place like Florida, the more extended amount of time you own the house, the more sense your capital gains tax will make. For example, if you sell your Florida vacation home after less than a year of owning it, you will need to pay the short-term rate. If you sell after a year of ownership, the rate will be different.