Have you dreamed about owning a second home in Arizona?
Perhaps you find yourself in a position where it would make sense to have another home in a vacation location, like Arizona.
If your life and finances make owning a second home an option, you’ll be interested to know that there are still tax benefits, along with lifestyle perks to owning a second home.
Some exciting parts of home ownership are pretty evident in the purchase of a second home in Arizona. Firstly, if you can afford the initial expense, a second home used as a rental property can be a way to increase your income and cash flow. Also, in terms of quality vacation time and relaxing with family, a second home in Arizona for a yearly break seems a lot more “fun” than investing in mutual fund.
A third aspect to consider though is that homes typically are solid investments. The housing market regularly changes, however looking long-term, you’ll find that homes appreciate. Expecting to quickly buy and then sell an Arizona vacation home, however, can be quite risky, and is not recommended.
Whenever you purchase a home in Arizona, whether it is your first or your twenty-fifth, remember the key to good real estate investments. Location is critical. Trust your real estate agent to advise you on Arizona areas where you are not familiar, and make sure your investment is in a sound location now and in the years to come.
Depending on your area of interest, you may be able to find a great deal on a condo or home while mortgage rates are still low. Current low interest rates can provide for a more desirable property without increasing your budgeted amount, and depending on your situation, can be advisable to paying cash. Qualifying for a second home loan can be tricky, though, and if you intend to use the home as an investment, you will need to evaluate that the “numbers” make sense.
Owning a Second Home in Arizona- the Numbers
Some of those numbers, aside from any mortgage payment, include insurance, taxes, and maintenance costs. If you plan on using your Arizona home as a vacation rental, you will most likely need to plan on increased insurance, and additional furniture and furnishings costs too. Maintenance will be higher than just a simple garden and pool service, too, as cleaning and repairs will be required after each tenant. If you will not be living in the home, it is wise to hire a property management company to oversee the property - handling emergency weather and hazard events - from fires and thermostat regulation in desert home areas.
Prior to buying a second home you also need to consult with professionals who work with estates, taxes, and finances to make sure owning a second home in Arizona is the right decision for you. Consider whether the second home would pay for itself as an investment property or if you can realize tax-benefits with expenses or depreciation. You should also recognize that as a rental, the home will only be available for your personal use about two weeks per year, unless you agree to take less of a deduction. If you choose to only rent the home for up to 14 days per year however, you can still receive rental income, but tax deductions will not apply. As mentioned before, your tax professional should be consulted to fully explain current tax regulations on owning investment property. Either way, armed with the correct information and the right real estate agent, can explore the options of owning a second home in beautiful Arizona
