There are many advantages to having a vacation house. If your home away from home is situated in a sunny state, then you can always go there during wintertime. If you’re stressed over your job and you need some R&R, then simply head over to your cabin in the woods for some quiet time.
But, did you know that you can also make money on your vacation home? If you’re tired of your beach house and you want to relocate, there’s a way for you to get another vacation house without spending too much and you even get to make a little bit of money.
Put it up for rent
You can start your journey to getting another vacation home by putting your current vacation house for rent. But to clarify, the payments you’ll get from your tenants won’t be the money you’ll use to buy another vacation house. Instead, save the money so that when you get another vacation home, you can spruce up that one.
Find a long-term tenant
The key here is that you find a tenant to rent out your property, but it would be better if you find someone who’s willing to rent your property for a long time, say about six months to a year. The reason behind this is that you need to convince the IRS that you’ve converted your vacation home into an investment property.
Now, you should be meticulous in screening potential tenants and weed out those who are just looking for some fun under the sun (if your vacation home is a beach house). Try to do some background checking on the people who are asking about your property. Look for tenants who are in town for business and are planning on staying for a long time.
You should also state that in your ads so that you’ll be able to dissuade short-term renters from bothering you. If your vacation home is prime real estate, you’ll have no problems finding a tenant. But if you do encounter some difficulty getting a tenant, try to accentuate the better qualities of your home. For example, write in your ad that you have a view of the beach.
Refer to the exchange property law
If you haven’t heard of the 1031 exchange services,then you should start learning more about it because it can help you with your vacation home. According to Section 1031 of the IRS, if you put up your vacation home for rent from six months to a year, you can swap it for another like-kind property.
This means that if you have a vacation home that you want to get rid of, you have the option to rent it out for six months to a year to anyone and this will convert your home into an investment property. Once the one-year rent is over, you can swap your vacation home for another home as long as the new property is similar to your old one.
Taking this route will help you get another house without having to spend any money. And at the same time, you’ll earn an income while your old vacation home is being rented. All in all, it’s quite a wonderful arrangement that you should use to your advantage.