Sandy L. asks
Summer homes. Do they ever make financial sense?
In the grand scheme of things, probably not. They’re really not something that I understand at all. Most people would be better off just renting a place for the small amount of time they use the summer home, especially if that home is not the only place they vacation in each summer. But people don’t do summer homes for the financial reasons.
HOWEVER, there are some scenarios that can make financial sense. If you can claim the summer home in another state as your main residence, you might be able to get a break on state income tax. If you rent out the summer home the 9 months of the year you’re not using it, you may be able to make some $ if it’s in a desirable area (particularly if it’s someplace in CA where property taxes are frozen and you bought years ago). If you turn it into a B&B/Air B&B place it might make $. And if you’re lucky enough to buy someplace that magically goes up in value after you’ve bought it, you might be able to sell for enough profit that it’s all worth while (particularly, again, if it is in California).
If you use it also as a weekend home, you might save money over staying in a similar place that you don’t own each weekend. If it keeps you from jaunting off to Europe on a regular basis, it might also save money. If your second choice would be extremely high priced rental lodging for you and all your servants, then sure, it might make financial sense.
Those of you contemplating summer homes, keep in mind that federal tax treatment of the mortgage deduction for these may be changing in the near future (getting rid of the mortgage deduction is a good thing economically in the long run), making second homes more expensive to own.
Any experience with summer homes, Grumpy Nation?