Tag Archives: rental property

What Are the Drawbacks to Purchasing a Vacation Home With My Same Sex Partner?

Purchasing a vacation home can be exciting when you consider that you will have a place to go anytime that you choose to do so, but along with the advantages, there can be disadvantages. Following are some drawbacks to purchasing a vacation home with your same sex partner.

imagesMortgage

Unless you have the money to purchase a vacation home outright, you will have to pay a mortgage. Generally, the required down payment and mortgage interest rate will be higher on a vacation home than it is on your primary home. In addition, your homeowner’s insurance will likely be higher because of the risk involved in the home sitting vacant and, depending on where the home is located, in natural disasters.

Most people look for vacation homes in popular areas where they like to visit such as the mountains, the beach, or near golf courses. Because those places are popular, the cost of purchasing a vacation home may be much higher than you have anticipated and your mortgage payment may end up being more than the home that you live in.

Renting the Home to Others

Many vacation homeowners prefer to rent the home out for periods varying from a few days to weeks in order to recoup some of their expenses and to avoid leaving the home sitting vacant for extended periods of time. If you rent your vacation home to others, the Internal Revenue Service, requires that you pay taxes on that income. If you used the home for personal purposes, but not as a home, you must report your rental income as well as the expenses on your tax return. You will be required to divide the expenses you incurred into rental use and personal use. The personal use expenses are not deductible in your rental expenses. If you rented the home less than 15 days out of the year, you are not required to report the rental income or the rental expenses. Your mortgage, interest and property taxes should be reported as you normally would on your income taxes.

Maintenance

Your vacation home, just like your primary home, will require maintenance. Many people choose to leave the home vacant when they are not visiting so that it is always available for their own use. If you live more than two hours away from the home, the chances of you being able to visit the home very often to check on it and take care of any maintenance that is needed are slim. If you cannot afford to hire a caretaker, you can expect part or all of your vacation time to be spent on home maintenance.

How Much Can You Afford

Before you look for a vacation home, you should decide how much you can afford to pay, and the amount that each of you will contribute to the mortgage, taxes, insurance and upkeep on the home. Even if you intend to rent your vacation home to others during the times that you are not using it, you should not count any rental income in your calculations. It would be best to ensure that you can afford both your primary home and the vacation home from your own incomes.

If you are ready to look for the vacation home of your dreams, contact a professional LGBT real estate agent. He or she will help you through the entire process of locating and purchasing your home. You can locate the best LGBT agents located in the area you are considering making a purchase by conducting a search on GayRealEstate.com. There is no fee or obligation. For more information on hiring a real estate agent, see our article Top 10 Reasons to Hire a Gay Realtor for Your Home Purchase.

Posted on February 8, 2015 in Vacation Home

5 Keys to Buying Rental Property with Friends

Buying rental property with your friends is a business deal and, as with any business deal, there are issues that should be considered before taking that step. Below are 5 keys to buying rental property with friends.

images (1)1. Be sure that your friends can be relied on. Entering into a partnership with friends who are not dependable or do not follow through with promises may not be your best choice for purchasing a rental home with.

2. Discuss how much you can collectively afford to spend on a rental property and what each friend’s contribution will be. You should also decide how you will hold ownership of the rental property. Generally, when friends buy property together, they hold ownership by tenancy in common. This means that each owner has an equal right to the property and can sell his interest without the other owner’s approval. Any number of individuals may own different percentages in one piece of property under this type of ownership. For example, you own 25 percent, a friend owns 25 percent and another friend owns 50 percent. Generally, the percentage of ownership is decided by how much each person has invested to purchase the property.

3. Create a written partnership agreement outlining the details of ownership and how future transfers of ownership will be handled. For example, if one friend decides to sell, the other partners have the first right of refusal. The agreement should also spell out the financial obligations of each friend and what will happen if one friend stops meeting his financial obligations. Other details to consider include who will be responsible for ensuring rent is collected and that the mortgage, insurance, taxes and maintenance are paid for? Who will be responsible for maintenance and repairs? It would also be wise to include a procedure for resolving disputes. For example, by unanimous vote or by a majority of the vote.

4. Consider forming a limited liability company, LLC. Purchasing rental property as an entity rather than an individual can help protect the owner’s personal assets. Each friend will become a shareholder, but you will not be personally liable in the event that the owners, you and your friends, of the rental property are sued. LLCs have the ability under law to conduct business including purchasing, owning and conveying real estate, the power to make contracts, and to borrow money when necessary.

5. Make sure the rental home is a good investment. An LGBT real estate agent will know and can help you find an investment property and assist you with the purchasing procedure.

The advice contained in this article is for informational purposes only. It would be wise to seek the advice of a real estate attorney to assist you with the legal aspects of buying rental property with friends.