There can’t be too many of us who haven’t dreamed of owning a holiday home, and with some careful planning, your vacation residence can also be a healthy investment.
Research from 2014 revealed on average just under 3% of the population own a holiday home. But a lot has changed since then.
In previous generations, a holiday home may have sat vacant for much of the year, often filled with rough and ready furniture and a few bunks in the sleep out.
That was before the likes of Airbnb and HomeAway came along, making it easier to put holiday homes to work, earning hard coin.
Figures from Inside Airbnb show just how many properties are available as holiday rentals. In Sydney’s beachside Pittwater area for instance, 1,067 entire homes are up for grabs for vacationers. In Victoria’s picturesque Yarra Ranges, over 600 homes are listed on Airbnb.
The upshot of all this, is that owning a holiday home is no longer a luxury. It can be possible to put your holiday home to work – not just earning long term capital gains, but also delivering a regular income from likeminded holidaymakers. And yes, it’s still possible to keep the place available for you and your family, at your favourite times of the year.
Before you sign up for an investment loan on a holiday home, think about what you’ll get back beyond happy memories and Instagram-worthy pics.
Gone are the days when a beachside shack could be picked up for a song. In many popular holiday destinations, especially larger centres such as Queensland’s Gold Coast, property prices can be high, and during peak seasons, competition for the tourist dollar is stiff.
Being prepared to look beyond the main centres can give you more buying power – and today’s hidden enclave could be tomorrow’s next property hot spot.
Accommodation at your fingertips
Buying a holiday home in a location that you and your family love, can make vacations effortless, and forming deeper ties with an area can also make the place even more special to you.
By making the property available for holiday lettings when it’s not being used by you, your holiday home has the potential to pay its way. And you could have an opportunity to pocket extra tax savings along the way.
That said, it is important to consult with your tax adviser about owning a holiday home. Some points are worth noting:
- While you can claim expenses for the period your holiday home was genuinely available to rent, even if no one rented it, you need to declare and pay tax on any rental income – minus associated expenses.
- If your family and friends use the place for free, any expenses incurred during that time cannot be claimed on tax.
- Demand for holiday homes is often seasonal, and just which season is “peak” varies between locations. Either way, your vacation property could experience extended vacancies during off seasons.
Should you make the leap?
Like any investment property, your holiday home will come with costs such as maintenance, advertising, insurance and management fees, which will all eat into your rental income. If you can comfortably manage these costs, even during periods of low demand, your holiday home could offer the best of both worlds – good times and great memories for you and your family, as well as being a worthwhile investment.
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- Chapter One : Things to consider before investing in property
- Chapter Two : Determining where to invest
- Chapter Three : Investment properties by dwelling types
- Chapter Four : Finance for your investment property purchase
- Chapter Five : How to invest in property
- Chapter Six : Adding value to your investment property
- Chapter Seven : Positive and negative gearing
- Chapter Eight : Getting your loan
- Chapter Nine : Selling your investment property