- Things to consider while buying a vacation rental home in Destin
- Stick to your budget
- Never overlook ongoing maintenance
- Choose location smartly
- HOA dues
- Other precautions
- Florida’s real estate tax law benefits
- · No personal income tax
- · No state tax on the capital gains
- · Homestead exemption reduces property tax
- · No estate taxes
- · Opportunity zones
- Other advantages besides tax
- · Generous rental write-off
- · Potent rental economy
If you are planning to invest in a vacation rental property then check Destin Florida’s real estate market. It is a hot tourist destination. On destinflorida.com, you will gain a view of the variety of homes, condos, townhouses for sale in the neighborhood of Destin like Walton Beach, 30A, and Sandestin. The platform is a one-stop solution to know about vacation rental buy or sell, upcoming events, activities to enjoy. You can even make a direct booking for accommodation and activities from DestinFlorida.com.
Things to consider while buying a vacation rental home in Destin
Stick to your budget
It is exciting to purchase a vacation rental condo or mansion, but never get caught in your emotions. Crunch and analyze the numbers at each turn. Avoid buying a capacious mansion if it is not within your budget because you feel it will bring in better ROI. The mansion can have better earning potential yet you must not ignore the possible limitations and drawbacks.
Consider a well-established condo building that offers bookkeeping and property management services. You may feel that there will plenty of competitions, which will reduce your potential ROI. Nevertheless, remember well-established vacation condo buildings are stable, so is a great purchase option.
Never overlook ongoing maintenance
When you are calculating the financing options and new investment mortgage, consider the common monthly expenses like repairs, cleaning between guests, furnishings, insurance, utilities, taxes, property management services, cancellations, vacancies, supplies, and marketing.
Choose location smartly
Location is a significant factor in a hot tourist destination. Some features grab tourists’ attention including –
- Recreational amenities like fireplaces, pools, saunas, and hot tubs.
- Near to public transportation or walkable neighborhood.
- Accessibility of basketball court, golf courses, etc.
- Safe neighborhood.
- Pet-friendly spot.
- Grocery store at walking distance.
- Local activities close by.
If budget is not a problem, then you can choose a townhouse in Miramar Beach in Destin Florida because you will enjoy family activities all summer like dolphin cruises, parasailing, go-karts, outlet malls, putt-putt golf, and restaurant galore. For dense crowd and tranquility check the Santa Rosa Beach on 30A listings.
Plenty of condos in the Destin area have HOA dues coverage. It covers the cost of water, sewer, cable, Wi-Fi, trash, amenities upkeep, building insurance, pest control, on-site management, and landscaping. The majority of condo associations even include insurance coverage against wind, flood, and hurricane damages in the HOA.
- Avoid properties that need considerable repair or a lot of routine maintenance. Remember, high renovation needs can push the budget out of control.
- Consequently, you will also need to budget rental income loss during renovation time
- If you are a contractor or handyman then the improvements can be done at 50% less cost than hiring other professionals.
- Even the properties that have current tenants or future rental bookings need consideration. You may need to respect the current bookings or lease.
Florida’s real estate tax law benefits
· No personal income tax
Migrating to Florida will eliminate the city taxes levied on your income. This is the main reason that affluent people having disposable income are flocking to Florida for a permanent stay instead of just in winter. Besides, the coronavirus has also pushed New Yorkers to move to Florida as work from home is the new norm.
· No state tax on the capital gains
The difference between a home’s initial purchase price and subsequent sale price is defined as capital gain value. The residents of Florida are eligible for federal capital gain tax exemption of $250,000[single filing] or $500,000[Joint filing] on primary residence property. The condition is that the seller has to have stayed there physically for a minimum of 2 years.
· Homestead exemption reduces property tax
Florida citizens receive a $25,000 exemption on their first residence under Homestead Exemption Act. Even if the resident has to pay the property taxes, homestead exemption allows reducing the assessed value by $25,000 before tax calculation. It even protects homeowners from creditors during bankruptcy proceedings.
· No estate taxes
The estate tax is referred to property taxes that someone who died hands down to their nominees. Property assets include cash, stocks, and land. It is confused with the inheritance tax. Inheritance tax is imposed on the overall estate’s specific portion, while estate tax comprises the entire estate. Florida banned this estate tax more than a decade ago, which is beneficial to real estate investors here.
· Opportunity zones
Opportunity Zones is a part of the Tax Cuts & Job Acts associated with Florida. Tax incentives are designed for encouraging investors to invest in rural and poor areas. Financing these improves the area’s economic development, which otherwise could have been left behind. Florida has more than 400 opportunity zones. Investors can enjoy benefits like permanently deferring from paying capital gain taxes on Opportunity Zone properties owned for a minimum of 10 years.
Other advantages besides tax
· Generous rental write-off
The rent rate has increased 30% from 2011 – 2020 as the rental homes are in demand around Destin. People are opting to rent, while ownership has declined below 50% in the majority of the biggest metropolitan regions around Florida. Real estate investments are appreciated in value and each penny spent on rental property management is tax-deductible.
· Potent rental economy
Florida’s rental market is skyrocketing. Renters are keen to pay more on every option ranging from multi-bedroom homes to a single-room condo. As the climate is mild and tax benefits Florida has a high retired renter’s percentage and they make great tenants because they are keen to stay in a single property for long and have a steady income than adults and youngsters. Buying a vacation rental home for long-term vacationers or tenants is a profitable investment.
Any kind of vacation rental property you invest in ensure to have an experienced support team for the entire process ranging from finding a suitable property to financing to property management. Find a local realtor as they have multiple contact networks including leasing agents, lenders, accountants, attorneys, contractors, and property managers. You will learn a lot as the process needs time and experience, which will help to avert costly mistakes of property investment!