Snow-capped mountains rise over the vast horizon, deep valleys cut through lush woodland and meadow, and massive lakes reflect the silhouette of the imposing mountains — every inch of Idaho is covered in natural beauty that cannot be truly captured with the snap of a camera. Known as the Gem State, Idaho has quickly risen as one of the fastest-growing states, thanks to its breathtaking beauty, sturdy economy, diverse employment, and booming tourism industry. In fact, it’s the $3 billion tourism
business that has distinguished Idaho as the prime destination for buying a vacation home among resort towns like Tamarack. A number of Seattle homeowners have found that a second home in Idaho is a great way to earn extra income, as well as plenty of other benefits.
If Seattle’s cloudy and rainy days have you longing for a change in scenery, a second home in Idaho may be the perfect move for you. Read on to learn more about the benefits of buying a second home.
Additional source of income
There are a couple of ways you can earn a little bit of extra income with your second home, especially if you buy property close to popular resort towns like Tamarack.
Vacation rentals are arguably the most popular source of additional income generated from a second home. Since Idaho’s economy largely benefits from its tourism industry, it’s easy to see why so many homeowners have transformed their Idaho homes into luxury rental units. Tourists tend to prefer the comfort of a furnished home over the hassle of booking a hotel room and dealing with noisy neighbors. With apps like Airbnb streamlining the vacation rental business, it’s never been easier to set your own rates and manage your property from wherever you are in the world. It’s a great way to earn extra income from your second home while you’re not using it for yourself.
Luxury condos are another popular option. Condo buildings are aplenty in Idaho, and many owners choose to rent out their units for a bit of extra income. Consider investing in a condo that’s located near popular resort towns, outdoor activities, shopping, restaurants, and other desirable amenities. In real estate, location is critical to determining the value of a home. The more desirable a location, the higher profit you can make while renting out your condo.
Opportunity for long-term profit
One of the most beneficial aspects of owning a second home is the long-term profit you’re able to earn. Perhaps the most useful benefit is home equity
. Defined as the difference between your second home’s current market value and the remaining mortgage amount, home equity is used in a variety of ways. They include HELOCs (home equity lines of credit), home equity loans, and cash-out refinancing on a new or existing mortgage. Home equity is easy to calculate. For example, imagine you buy a second home in Idaho for approximately $400,000. As market values increase over time, so does the value of your home. If your home is valued at $500,000 within the next five or so years, that means you have earned $100,000 in home equity just by owning the home. This sum, however, does not include the initial equity you earn from paying a down payment and subsequent mortgage payments. The total sum of money earned is effectively yours and may be used at your discretion.
Benefits of buying with cash
Of course, if you’re not interested in taking out a loan and paying off a mortgage, there are several benefits for cash home buyers in Seattle. Since the median home cost in Idaho is lower than in Seattle, buying a second home with cash is doable. The benefits of buying with cash include
no interest fees, closing costs, mortgage fees, appraisal fees, and other additional costs that come with taking out a loan. Cash offers are also considerably more attractive to sellers. Sellers are more likely to accept a solid cash offer because they don’t run the risk of buyers canceling a deal due to a lack of financing. All in all, it’s a safer bet for sellers, and it saves cash home buyers tons of money and stress.
Tax deductions on your mortgage
If you do take out a loan for your second home, it’s important to keep in mind that you may qualify for a number of tax breaks
. Depending if your home is categorized as a personal residence or rental property, the qualifications for various tax deductions vary. If you plan on strictly using the home as a personal residence, you may qualify for tax deductions on mortgage interest and property taxes. On the other hand, if you plan on using the home as a rental property, you may claim tax deductions on the expenses involved with operating the rental.
A future retirement home
If you find yourself drawn to Idaho’s relaxed lifestyle and envision yourself comfortably living there, your second home may end up becoming your retirement destination. Retirement plans are always stressful and time-consuming, but if you already have another home waiting for you, you don’t have to worry about choosing where you’ll spend the rest of your life.
Idaho is a great choice for retirement because it’s tax-friendly for retirees
. It doesn’t tax any Social Security or Railroad Retirement benefits, and the income tax the state charges on 401(k) and IRAs is low compared to other states. Even property and sales taxes are on the lower end, making Idaho a sound choice for a second home.
For additional information on Tamarack real estate and how to finance a second home, contact Tamarack Realty
. With over $1 billion in sold real estate, Tamarack Realty is an elite team of Idaho realtors committed to you and your success. Whether you’re in the market for a luxury condo or Idaho vacation homes for sale, they’ve got you covered. Reach out to the team to get started!