The combination of rental income and easy future holidays is attractive to many, but it’s important to carefully consider if buying a holiday home is a smart investment for you
Many of us dream of owning a holiday home or vacation residence that can also be a healthy investment.
In previous generations, a holiday home may have been vacant for much of the year, filled with rough and ready furniture and a few bunks in the sleep out. That was before AirBnb and HomeAway, which make it easier to put holiday homes to work earning money.
Owning a holiday home is no longer a luxury. You can put it to work delivering regular income or potential profit you might make if you decide to rent it out to a tenant. It’s still possible for you and your family to use the place at your favourite times of the year.
Think about what you’ll get back beyond happy memories and Instagram-worthy pics before you sign up for an investment loan on a holiday home.
Gone are the days when beachside shacks could be picked up for a song. Property prices can be high in many popular holiday destinations.
Be prepared to look beyond the main centres to give you more buying power. Because today’s hidden enclave could be tomorrow’s property hot spot.
Your holiday home has the potential to pay its way if you rent it when you’re not using it.
If your holiday home is also an investment, you could also have an opportunity to pocket extra tax savings along the way on some of the running costs (such as interest on a home loan and maintenance), but keep in mind there are restrictions around this, and you can find out more from the Australian Taxation Office.
It is important to consult a tax adviser about owning a holiday home. Some points worth noting:
Your holiday home will have costs that eat into your rental income. These include maintenance, advertising, insurance and management fees. If you can comfortably manage these costs, even during periods of low demand, your holiday home could offer great memories and be a worthwhile investment.