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Vacation Home Considerations

So, you are thinking about buying a vacation home. It has been said that the two best days of being a boat owner are the day you buy it and the day you sell it. The same can be said of buying and selling a vacation home. The purpose of this article is not to dissuade you from purchasing your dream vacation home and it should not be read in that light. Nevertheless, as with any other major purchase, it is always prudent to look before you leap. Against the backdrop of the old adage about boat ownership, here are some key considerations, when it comes to a vacation home.

Can You Afford It?

Obviously, if you do not have the money to buy something, then that alone should give you pause. Have you paid off the mortgage on your primary residence? If no, can you afford two mortgages? In addition to mortgage payments, what about the ongoing expenses like utilities, taxes, insurance premiums and maintenance costs? If you are thinking about financing your purchase in part by renting your vacation home between visits, then do your homework first. For starters, are vacation home rentals permitted in the community? If yes, what are the local laws, regulations and taxes? Logistically, how will you handle advertising, tenants and cleaning between stays?

Aside from being able to afford the initial purchase, ongoing expenses, and potential rental issues, will you be able to sell the vacation home quickly in an emergency? Although real estate is a solid investment, it is also a rather illiquid investment. In other words, unlike publicly-traded securities that are traded on major exchanges every day, it is much more difficult to sell real estate quickly, if necessary.

Will You Use It?

On the heels of “can you afford it,” make an honest assessment of whether you and our loved ones will use the vacation home enough to justify the purchase. It is easy to come off the high of a magical family getaway with everyone excited to later, rinse, and repeat the experience again and again. If your children are young, then you have a future of school activities, let alone the extracurricular sports, dance, band, theatre, choir, and summer camps ahead of you. Similarly, older children may have the same and other distractions. As a result, unless the vacation home may later become your retirement home, take some time before you sign on the dotted line and let the emotions settle after returning from that magical family getaway.

Will You Transfer It?

If you take the plunge and purchase a vacation home and continue to make magical family memories there, at some point ownership will be transferred either by default or by design. The latter is the preferred approach, while the former should be avoided at all costs.

Especially when your children have become adults, two obvious transfer options would be to sell the vacation home or to leave it as part of the inheritance for your family. Before selling it to a third party, you ought to first offer the vacation home to your children for purchase. If no one shows any interest, then none of them can complain if the vacation home is sold outside the family.

When it comes to leaving the vacation home as part of the inheritance, you have many options to consider. For example, you may create an estate plan that avoids probate of the vacation home in the state where it is located, while also facilitating its ongoing management for the family and/or tenants. Such an estate plan may include the creation of a revocable living trust and a limited liability company (LLC).


A vacation home can be a great financial and emotional investment under the right circumstances. Otherwise, you may be better off renting than buying.

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Dublin, OH 43017
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