GMAC Real Estate Renting Recreational Property
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Renting Recreational Property

Takeaways

  • Renting your recreational second home is a great way to defray some of the ownership costs.
  • Decide what tax category you want your second home to fall under – personal residence or investment real estate.
  • Take the time to make your recreational rental appealing to potential renters.

Did you know?

  • Almost 40% of vacation second homes are near resort or vacation areas.
each houses are popular recreational second homes. Recreational property -- golf course homes, waterfront homes, ski condos or the like -- present a number of options. Often this real estate is purchased for your own recreational use. These properties are luxuries in the sense they will sit idle when you're not enjoying time away from your primary residence. A good way to defray the cost of recreational property is renting it out.

Once the decision to rent is made, to maximize the tax benefits the property should be deemed a full-time rental investment. This means you use the home for either 14 days or fewer during the year or not more than 10% of the days the property was rented at fair market value. This is known as the 14-10 Rule and allows you to deduct expenses for maintenance, repairs, utilities and depreciation. Keep in mind time spent in maintenance, such as painting or repairs does not count against your personal use of the property.

The trade-off for rental income and the tax benefits of meeting the 14-10 Rule is you lose the mortgage interest deduction of a residence. A home that sits unrented for an entire year can be designated a "qualified residence" and receive the full interest deduction. This is an area where you want to look at your intended usage of the property and see if it makes more financial sense to earn some rental income and meet the 14-10 rule for one set of tax benefits against not renting the home, but deducting your mortgage interest. Keep in mind you can change the status of your property from personal to investment each year if you wish.

Keep Up the Appearances

Recreational property rentals should be regularly checked on to make sure renters are provided a pleasant and relaxing experience they want to repeat. It's a good idea to cater to the people who are writing the check, and a great way to do this is to invest in high-quality bedding in the main bedroom. Another good idea is to replace the kitchen and bathroom throw rugs several times a year with new, inexpensive and colorful rugs.

Occasionally spending a little extra time cleaning, above and beyond what your hired service provides, can make a major difference in how renters see your property.

Here's a list of quick and easy details to check:

  • Make sure the entryway is clean.
  • Two words -- welcome mat.
  • Clean or repair the street numbers if necessary.
  • Clean all kitchen appliances.
  • Check the bathrooms for signs of mold.
  • Tidy the yard, sidewalks and landscaping.
  • The front door should be clean and the knob and lock should be easy to use. The front door will be your renters' first experience with the property.

Search for Second Homes for Sale

To search for a selection of second homes for sale, please visit lifestylehomesearch.com, or visit the website of a GMAC Real Estate Office that serves the area where you'd like to buy a second home. To learn more about buying Second Homes or Vacation Homes, explore the rest of this section, or contact a GMAC Real Estate Agent.