This article is about purchase or long-term rental of second homes. See vacation rentals for limited stays in vacation homes.
A permanent vacation home, holiday home or second home is usually a long-time investment, for decades, or even generations to come. In a low-income country, or a less busy countryside, it does not need to cost a fortune.
Second homes of strangers or friends may be available for short-time rent, either directly or through some rental agency, as vacation rentals.
People have second homes for a variety of reasons. In general, ownership becomes more economic the more time you want to spend at a place.
Although some points apply to any type of second home, this article focuses on homes for vacation use. We assume that the second home is some distance away from your main home, but it might be in the same country a few hours drive away, or it might be on another continent.
You should consider transportation when buying your second home. If getting to your dream château involves a strenuous hike over rocky footpaths, you may want to ask yourself whether you want to do that once you're old and frail and how you'd get anything you need to your abode.
The nearby airport might have cheap flights today, but will it still see any service in decades hence? Airports in both Denver and Munich were moved overnight to new sites, with the new Denver airport being more than 15 miles/25 km from the old one and the Munich Airport even moving . A rail line may have more staying power, but branch lines have been abandoned in the past, and trains may cease stopping at your station on a main line. Roads may be tolled if politics change and what do you do if you can't or don't want to drive any more?
Most often, a cottage will be in a remote and rural location with no airport, no rail service (or, rarely, a money-losing skeleton of a rail service to some remote region where there are no highways) and no public transit. A few off-the-grid locations are only accessible by boat. Even if there is a drivable road, if it's just a single lane of gravel across a neighbor's farm (on private land), it may be impassible in winter if snow is not plowed. Many points, ranging from remote Newfoundland outports to a few of the Thousand Islands, have become ghost towns as the only access was by a ferry which is no longer running. Want in? Buy a boat – and find a way to keep it secure while you are away. The more remote a place is, the less priority will be usually given to restoring transportation links severed by man-made or natural disaster. If a trunk line highway is impassible for a day, it may make national headlines. If an avalanche cuts off your holiday cottage, you may only hear of it months later and the problem may take years to be addressed.
A property that's off the grid and only reachable by float plane or snowmobile may look like a bargain (or a chance to "get away from it all") initially, but a place that is difficult to reach will also be harder to sell later.
Some pieces of property come with a private driveway, or a cooperatively owned road. In that case, the upkeep cost is on the owner.
Owning a piece of real estate involves a lot more paperwork (and risk) than simply going to a place for vacation:
Work out what the running costs of your property will be. Things to allow for include:
All countries have different laws, regulations and tax systems for property. Sellers and real-estate agents might not tell the whole truth, and some fraud schemes are associated with holiday property sales. Seek out the destination country's tax agency, or another national authority, for complete information. Timeshares have a bunch of issues of their own.
Most people buy their second homes, but a few are leased. If you are leasing, you are likely to be making a long term commitment and many of the same considerations apply. In some types of vacation home development, you may have to do a combination of both – buy the physical house, but lease the land it is sitting on. Unless the house is cheap to build or easy to transport, the legal implications may be convoluted.
Buying a home is a major purchase and is subject to the local laws on property ownership (and sometimes special rules on second homes). You may be surprised at the differences compared with the laws you are familiar with at home. It is important to take good independent advice. Whilst you may get useful informal advice in the early stages of looking at buying a second home, you should pay for professional advice before you enter into any commitments (or sign anything). Unless you are fluent in the local language, it will be easier if you can find professionals who speak English.
Abandoned houses in some depopulated towns can be bought at a near-zero token cost (1 euro in some villages in southern Italy), but the purchase comes with a commitment to restore and maintain the property.
Do you have any knowledge on the future of the neighborhood? Is your nice countryside villa in an area planned to become a suburb? Or where the motorway is to be built? At least check official plans. On the other hand, if most neighbors are old, the village may lose its shop, post office and bus line as the population drops – or you may lose the good neighbor who was keeping an eye on your place while you were away. On the other hand, don't "bet" too much on a future that may never come. Mad Men (set in the 1960s) famously has a throwaway joke about an apartment being a steal because of the "soon to arrive" Second Avenue Subway – a line which only opened in 2017. All forms of infrastructure can fall victim to this, so don't bet on that "soon to be inaugurated" piece of infrastructure if you cannot do without.
If you lease your house, the contract is not necessarily renewed when the term ends. What about your children (or grandchildren) who spent all their summers there and love the place? Even the "99 year lease" frequently employed in Commonwealth countries to mean "essentially forever" can expire, as happened in Hong Kong in the 1990s, leading to it being given over to the People's Republic of China; something nobody who was around for the drafting of the original lease would have seen coming.
See also: Camping food
Smaller vacation homes have a very basic kitchen, if any at all. Many countryside houses are outside the electricity and water supply grid; if they have electricity, blackouts might be more common than in cities, possibly shutting down the refrigerator. Some countryside kitchens rely on propane, wood, or other fuels. A ground cellar can be used to keep groceries cool.
Drinking water might be drawn from a well, or from a retailer.
A vacation home far away from supermarkets and restaurants requires thorough planning.
Rights for fishing or foraging might, or might not, come with property ownership, sometimes depending on how you write your contract. In some places old farms also entail old rights to distill your own alcoholic beverages out of surplus produce or various other almost feudal sounding rights or duties. Many of those rights also have "use it or lose it" clauses embedded in them.
If the house is at the waterfront, boating might be an option.
While repairs can be one of the major downsides of a weekend home, many owners especially of weekend homes that are easy enough to reach and close enough for short trips come to enjoy upgrading and repairing and working on their weekend home and unlike many other hobbies, it provides with an immediately apparent benefit outside the fun of the hobby itself.
If the second home is in the same country as your main home (or a country in which you hold citizenship), you may be able to choose which property is regarded as your main residence for tax, voting and other purposes. You may get a choice of designating a principal residence in another province or federated state, which may have implications as everything from income tax rates to the price of car insurance. It may be necessary to actually tell the authorities so that they don't make incorrect assumptions. Some families declare the second home to be the main residence of one family member to claim tax advantages for both properties. On the other hand, public services may be tied to residency, and you will not want to have to go to your summer cottage for semi-urgent healthcare or to enroll children in local public schools. Some places charge a tax for second homes while others only charge a tax for a primary residence. This is in part because some funds are allocated by number of primary residents in a place. "Second home taxes" tend to be higher and more common in places that suffer from "cold bets" – a high number of second homes with residents that spend most of the year elsewhere.
How free you are to choose your official primary home varies by jurisdiction and sometimes by decisions by local authorities. In some countries, houses are classified as homes and vacation lodgings, where the latter may not be accepted as primary homes. Some may allow an unmarried couple to have a separate nominal primary residence for each person, while denying this option to married couples with rare exception. That's unfortunate if your contingency plan is that you keep one place each if you divorce later.
Sale of a cottage may incur capital gains taxes in jurisdictions where the primary residence is exempt. Governments often offer subtle home ownership incentives, such as a lower down payment for an insured mortgage on a primary residence or tax breaks on mortgage interest payments, for which a secondary residence or a rental income property might not qualify. Some jurisdictions allow a buyer of an existing rental home to evict the current tenants only if they intend to live in the unit themselves.
If you own one building and rent elsewhere, it may be tempting to designate the owned land as "primary" – if that doesn't put your principal residence in a high-tax jurisdiction far from your workplace and change your local school district to some small village a hundred country miles away. Some provinces deny professional or building trades licenses to non-residents. Want to draw extensive scrutiny? Accept a public or elected office, where seats are allocated per jurisdiction and often weighted to favour small provinces or states. Hordes of journalists investigating whether your tiny cottage on Prince Edward Island is habitable year-round may seem far-fetched, until your seat in the Senate (and its generous travel and lodging allowances) suddenly becomes dependent upon your actual residency in that province.
Some real estate may be far away from the comforts of modern life, like running water, electricity or even mail service. While it may be a refreshing experience to "get away from it all" and usually reduces the price of a prospective second home quite a bit, many find themselves researching the costs of Diesel aggregates versus solar panels or small scale windmills within a few seasons of buying a "rustic" second home with no electricity. Houses that aren't hooked up to local water or sewage mains may be environmental hazards or even violate local laws, and it is certainly not pleasant to deal with the waste product of human digestion in an area where no infrastructure to take care of that exists.
Purchasing buildings and land for occasional or seasonal use can get expensive – it is a house, however primitive, with the associated acquisition, maintenance and property tax costs. Some try to minimize these costs by sharing ownership with friends or colleagues; for instance, four different owners might each have use for a quarter of the time. These fractional ownership arrangements get complicated and awkward; what happens when one of the owners dies, goes bankrupt or wants out? What if a major repair is needed which one of the owners can't afford? For that matter, what happens when all or multiple owners want the cottage on the same long weekend?
Houses are usually built for permanent living. There may be problems with moisture when heating is off (or vegetation not kept at bay), and keeping systems on when nobody is there is costly and may involve hazards: think of plumbing breaking in your absence. Things that could easily be solved or would not be a cause for concern in a home that you live in can become a major headache if it happens during your absence. If a storm knocks a few tiles off the roof at home, you can have it fixed before more damage occurs. If it happens during the beginning of a long off-season, you might come back to a very expensive repair, to be arranged when you had looked forward to your vacation stay.
Many of the steps in getting ready to leave your ordinary house are equally valid when leaving your second home for the season (and do not fool yourself to depend on a later visit that you might not have time to do).
If your house has special cultural values, it may be or become protected, severely restricting what you are allowed to do. Sometimes also quite ordinary houses have odd restrictions on what may be done. Most importantly, repairing a valuable 19th century house may require your using old techniques and materials, paying for skilled craftsmen instead of buying off the shelf products. You might enjoy its atmosphere and be proud of owning and maintaining it, but you'll need the budget or the skills, preferably both.
If the property is in a foreign country, things get even more awkward. Some jurisdictions (such as Mexico) do not allow foreigners to buy land; others impose additional taxes or obstacles to obtaining a local mortgage, and in some you are required to cultivate the farm you bought. The property can be sold, for whatever the market will bear, but that carries additional tax pitfalls – any capital gain when selling, gifting or inheriting real estate may be hit with double taxation in both your home country and the property location. And then there's the nightmare of border control; it only takes one unaccountable, faceless bureaucrat to arbitrarily decide your intentions in buying land are suspect, label you an illegal immigrant and ban you from the country entirely. You now own an expensive cottage which you can no longer lawfully visit; good luck trying to arrange its sale from abroad. Things are vastly easier inside the European Union (if you are an EU citizen), but your country may decide to leave the EU, creating a lot of unforeseen problems.
Pests can be a nuisance, especially in wooden houses, and in the tropics. Overall, natural disasters that aren't a concern at your regular home might be a risk if your second home is located in a different environment; even, say, in a mountain range just a few hours' drive away.
Before buying, consider natural hazards in the area. Sea levels have been rising, which means low-laying property may be at risk at high tides combined with storms. Also flooding rivers have become more common in many regions, because of more rain or because of wetlands being taken into other use. In some places areas prone to flooding have been taken into use because of big demand, perhaps also relying on better water level management, which may or may not live up to expectations.
Insurance for a second home is generally more expensive than for the same house being used as a main home. Insurance policies may impose limits on how long you can leave the property unoccupied, or require that the property is inspected regularly. Policies may also require the property to be heated (to a low or not so low temperature) in winter even when you are not there. Ensure that you are honest with the insurance company about how the home will be used or they will have an excuse to refuse any claims that you make.
Good relations with the neighbors can help immensely to prevent problems deteriorating and to find people or firms to do maintenance and repairs. Even in the wilderness there may be hunters, fishermen and others roaming the neighborhood, who could look for anything out of the ordinary when passing by. In sparsely inhabited areas people often know each other and every regular visitor, so getting in touch with the right people may be easier than one would think.
You may wish to consider what your neighbors will think of a house near them becoming a second home. In some scenic areas locals are unhappy that their families cannot afford to rent or buy a house nearby, due to property being bought as second homes by people from elsewhere. In other locations the locals may be delighted that a nearby house is going to be used rather than allowed to become a ruin. In general, the people around your second home – especially those who stay around most of the year while you're not there – are perhaps even more important than the people around your first home. Build a good relationship, even a friendship with them and many things get easier. Annoy or enrage them and you may be in for a world of hurt.