Buying a Second Home on Sanibel: Should You Purchase a Vacation Property or Invest?

Buying a Second Home on Sanibel: Should You Purchase a Vacation Property or Invest?Sanibel Island is a dream destination just off the coast of southwest Florida. Because of its gorgeous outdoor recreation areas, it is a popular spot to visit and because of this, many people own properties that are second homes on the island and the neighboring island of Captiva. Often vacation homebuyers have a plan of recouping some of the costs of purchasing a second home by renting it out for most of the year when they are not using the home. 

What some homebuyers don't realize is, that if they plan to rent out their home for more than just a few weeks a year, that home now is considered an investment property. The IRS considers any second home an investment property if you rent it for longer than 14 days in a year. A vacation home may have the potential to almost pay for itself, but there are several factors of owning a vacation rental to consider before turning your vacation home purchase into an investment home purchase. 

Tax Responsibilities

When you own an investment property (which again is any second home you rent for more than 14 days in a year) there will be more tax responsibilities. The tax requirements of an investment property owner can become overwhelming for the average homeowner. You will want to hire professional help to make sure that you are properly reporting your income and the actual profit from your vacation property. Your legal tax payment obligations will be determined by the property, the state it is located, the city it is located, where your primary home is located, and how much income you make in a year. 

Managing the Property

When you are the owner of a rental you are the one responsible for ensuring that the rental is safe to inhabit. This means making sure all major repairs are taken care of as well as making sure utilities are in proper working order. You are also expected to know landlord-tenant laws and to know specific vacation landlord laws including zoning laws for vacation properties in the local municipalities where the home is located. 

If you purchase a home as a second home you need to be aware if the home location has restrictions about renting the property to a third party for a short period. In highly popular vacation areas it is not uncommon for there to be rules about the minimum amount of time that a property can be rented as well. 

Owning a rental is like taking on an extra job. You can hire a property manager, but the demand for your attention will still be there, especially if there is an issue with customer satisfaction. If you are not able to give the time or willing to take on a side hustle/extra job it is probably best to keep your home a strict vacation home. 

Taking Your Vacation

When owning a vacation home that you want to utilize for your dream vacations and as a home away from home, you have to consider the peak demand for that home. You might be fighting against wanting to use your property at peak vacation times or making prime vacation rental dollars. If your home is in a desirable enough location on the islands it could see decent occupancy at any time of the year. Many vacation homes can go without rentals at slower times of the year. This is something to consider. It can be harder to find renters and find repeat renters if your home is unavailable at the most popular times or in peak vacation season. 

Purchasing a vacation home and renting it out on Sanibel can be a smart investment if the homeowner is ready for all of the details and responsibilities that come with owning an investment property. Keeping a home solely as a vacation space that is open whenever you want. It can also be beneficial financially. The best choice depends upon owner preferences. 

If you are searching for a vacation property on Sanibel or Captiva Island, I am here to help. Contact me any time with any Sanibel/Captiva real estate needs. I am happy to help you find the perfect home away from home. 

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