A common topic we speak to clients about is about the merits of purchasing your own holiday house. The start of these conversations are usually based on a recent holiday the clients have been on, where they absolutely love the coastal town they’ve just stayed in but have paid a fortune for holiday accommodation.
It would be much cheaper to just buy the place! Wouldn’t it?
All of the costs involved are completely tax deductible! Aren’t they?
Well……. it depends!
We have seen some clients pour a lot of money into these investments, effectively making them a slave to the large debt they have incurred in buying the property. However, we have also seen other clients make very good investment decisions with holiday house purchases.
Things that need to be taken into account when considering the purchase of a holiday home:
I have some clients who have ceased renting out their holiday house purely to eliminate the stress of continual management, expense and upkeep. They have been happy to forego the income (which in most cases is not that lucrative after all expenses are paid) and can now stay in the property at any time they choose.
In all cases, whether rented out or not, make sure you have capacity to meet loan repayments, or better still have no debt on the property at all!
Owning a holiday house might be one of the more enjoyable things you and your family ever do. Just make sure you do your homework as well as ensuring you know what you are getting yourself in for.