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holiday home

What to know before buying a holiday home

March 31, 2019 10:00 am by Upside

It’s a dream many property owners share: buying a holiday home in a sunny coastal town or a cottage tucked away amongst the tranquillity of the bush.

Like any other property purchase, location, price and the property itself are important factors to consider if you’re thinking about buying your own slice of paradise. Whether you’re buying a holiday home for yourself or managing a holiday rental property, here are some of the key considerations to make.

1. Location

Proximity to schools and public transport may not be essential for your weekend retreat, but you’ll still want to be close to amenities like shops, a petrol station, cafes and restaurants. If you’re considering living permanently at the property further down the track (such as when you retire), it’s a good idea to choose a spot that’s nearby medical services and a local community.

Accessibility is also a factor to consider. Depending on your situation, you may want to be close to a highway and/or airport, but not so close that it will negatively impact your holidaying experience! Ideally, your holiday home will be far enough away to feel like a genuine getaway but accessible enough to get there in a couple of hours or so.

2. Property features

As you would with your full-time home, think about how many bedrooms you’ll need and how big you want the living room and kitchen areas to be. Also consider which features are must-haves and which would be nice to have.

Is a view essential? Do you mind being close to the neighbours? How much repair work are you willing to do? Is the property secure? These are all questions to consider carefully before jumping into buying a holiday home, no matter how idyllic it may seem.

3. Upfront and ongoing costs

Make a budget for all costs of buying and maintaining your holiday home, which includes expenses such as a deposit, stamp duty, utilities, repairs and more. Also remember that you’ll need to pay to furnish the property unless you buy or rent a holiday home that’s fully furnished.

4. Tax implications

Keep in mind that you may be subject to capital gains tax when you sell as a holiday home isn’t your primary residence. If you plan to rent out your holiday house when you're not using it, you'll also have to pay tax on any income earned, although you may be able to claim deductions for expenses.

Buying a holiday home tips

If you’re edging closer to buying that dream holiday home, consider these general tips:

Buy in the off-season – Avoid investing in a beach house at the height of summer or a chalet in the middle of the ski season. Instead, look for opportunities in the low season and focus on properties that are likely to receive plenty of interest in a buyers’ market.

Buy within your means – If you plan to rent out your holiday home while you’re not using it, keep in mind that you may not have tenants year-round – so it’s a good idea to only buy a property that you can afford to maintain even without rental income.

Choose a spot you really enjoy – Make sure the property and location you choose closely fits your lifestyle and preferences, as this home is likely to be a holiday destination for years to come.

So, should I buy a holiday house?

Still not sure if buying a holiday home is right for you? Here are some the pros and cons to help you decide.

Pros:

Rent-free holidays for you, your family and friends whenever you like Potential for profit from renting out to tenants Possible appreciation in value May be a suitable home to live in after retirement Rental income could offset maintenance costs, loan costs and council costs

Cons:

Ongoing costs can be a financial burden Damage or vandalism could go unchecked for months Like any investment, there is the risk that the property may not increase in value Holidaying in the same place may not appeal to you

Remember, when you're considering buying your own slice of heaven, it's the little details that count. Get access to top properties before they hit the market with Upside’s Buyer Advantage.

Upside

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