The million-dollar holiday
This summer, when you’re enjoying some time off don’t get carried away with that holiday feeling.
Chances are, if you are on holidays, you are by the coast. When you’re relaxed it’s very easy to get caught up in the romance of owning your own piece of paradise.
Tread carefully! The reality is that you will spend some, if not most, of your precious holiday time maintaining your holiday home, so your holiday can quickly become all about someone else’s holiday.
You may argue that the numbers stack up and it will be a cheap holiday place to visit. And at first glance it might. Purchase price, stamp duty and mortgages offset by the rental income can make it look good in the halo of optimism that comes with the first flush of real-estate lust.
The ‘we have got to have it and we will make it work’ compulsion is common when purchasing real estate. Before you know it, you may have spent over a million dollars on your holiday.
The ‘we have got to have it and we will make it work’ compulsion is common when purchasing real estate. Before you know it, you may have spent over a million dollars on your holiday. If you do decide to jump in, here’s how Brown say’s to maximise your returns and save money.
‘Holiday houses can be depreciated if they are rented out to a third party,’ says Tyron Hyde, quantity surveyor and depreciation expert at Washington Brown. ‘That doesn’t mean you can’t stay there when you want to, though.
‘As long as it’s available for rent most of the year you can block out a two-week period over Christmas and claim the depreciation pro rata. You are still entitled to that deduction regardless of how many weeks the property is actually rented out. As long as it was available for the full 50 weeks,’ Tyron explains.
‘I’m seeing many clients buy holiday homes at close to, or less than, the construction cost and if you furnish your holiday home, you’ll magnify the deductions,’ he says.