How to buy a million-dollar house

Before you To help you get started, we’ll break down the Let’s dive in.  IRS classifications: How your second home is taxed The availability of second home tax deductions largely depends on how the IRS classifies your property. Understanding these classifications is crucial for knowing what you can and cannot deduct. The three classifications are: Consult a tax professional to determine your home’s rental status and which tax form you need to file.  Tax deductions for second home ownership  Basking in luxury and relaxation isn’t the only advantage to owning a vacation home. Here are a few second home tax breaks you don’t want to miss.  Mortgage interest deduction Mortgage interest is the amount you pay to borrow money from the bank when you buy a home. A mortgage interest deduction is a tax benefit that allows owners of one or two qualified homes to write off the interest they paid on their mortgage. But remember that you can only Property tax deduction Another key second home tax deduction is for property taxes. Property tax is an annual fee charged to homeowners based on the value of their property. These taxes usually go toward funding local schools, public safety, roads and infrastructure, parks, library services and more. Home equity loan interest deductions You can Energy efficiency tax breaks The U.S. government offers two main tax credits for homeowners who make eco-friendly upgrades: the 5. Capital gains deduction A capital gain is the profit you make from selling a capital asset, such as a second home. The amount of your gain is the difference between your adjusted basis (what you paid for the property, plus the cost of any major improvements) and the net earnings from the sale (the selling price minus expenses like realtor fees and closing costs). One of the best ways to avoid tax on second home sales is to Understanding the 14-Day Rule and its tax implications The 14-day rule determines whether your property is classified as a personal residence with minimal rental activity or a full-fledged rental business, which impacts how your rental income and expenses are taxed. Tax-free rental income (14 days or less) If you use your second home as a personal residence and rent it out for 14 days or less during the year, a special rule applies: You don’t have to report any of the rental income earned on your tax return. However, it's a trade-off: You’re also not allowed to deduct any rental-related expenses, such as advertising, cleaning or property management fees. Reporting rental income (more than 14 days) If you rent out your second home for more than 14 days a year, you must report all the rental income you earn to the IRS. This is done using Schedule E (Form 1040), where you will report your gross rental income and can then deduct a wide range of expenses to calculate your taxable profit or loss. Additionally, you're allowed to depreciate the property. If the cabin’s value (not including land) is $240,000, the annual depreciation would be about $8,000. Rental expense deduction Rental depreciation deduction If you are using your second home exclusively as an You may recover the total cost of your expenses if the amount is less than $1,080,000, doesn’t surpass your taxable income and meets the requirements for a qualified property, service or improvement.  Here’s how you can qualify for a rental depreciation deduction on your second home: Many second home tax deductions are similar to those of a primary residence, however, the specific perks you can claim often depend on your usage of the property. Be sure to consult a licensed tax professional to better understand how second home tax laws might affect your tax situation. Find your perfect vacation home with Pacaso Understanding the tax benefits of a rental property is an important part of the journey. Once you're ready to find a property that suits your lifestyle, Pacaso offers a simplified path to

Home co-ownership has been around for a long time, and it comes in many forms. It can be as simple as a married couple owning a property together or it can be more complex, legally or financially.  Spouses and family members often choose joint ownership of a primary or second home so when one owner dies the property’s title passes to the surviving owner or owners.  Other Co-ownership benefits The Co-ownership downsides A smarter option Pacaso has developed a Buyers purchase ownership interest, ranging from 1/8 to 1/2, in a Pacaso co-ownership is more flexible than a Pacaso owners enjoy Definitely not a timeshare “ Timeshares have proven to be poor investments. Most lose 30-50% of their value and are notoriously illiquid, according to the 2020 Sherpa Report. Use rights are often rigid, and “owners” may feel (and act) more like renters.By contrast, co-ownership in a second home gives you true ownership in a place you can call your own. All owners agree to a Pacaso code of conduct and share an owner mentality.  Definitely not a fractional A less common ownership model is “fractional” or shared resort ownership. You may see these marketed as “residence clubs.” These fractionals differ from timeshares in that they offer fewer shares, so owners get more use time. They are also costlier than timeshares, averaging $161,500 per share in 2019, according to Ragatz Associates. Additionally, members must pay costly annual membership dues. Fractionals often offer hotel-like services and amenities, but do not guarantee use of a specific space. Owners buy access to a type of unit at a club or resort, not a home.  Pacaso’s Pacaso co-ownership delivers the benefits of whole second home ownership without the downsides. Check out

There are several On the other hand, people who rent out their vacation home often find that it’s very time-consuming. In addition to It’s no wonder many vacation homeowners hire a rental management company to handle all those day-to-day tasks. Here are the seven best short-term rental management companies. 1. Vacasa The company focuses on whole-family rentals, including single-family homes, condominiums and townhomes. The hallmark of its offerings is 24/7 customer service for renters via phone or app and local management teams in case issues arise. For property owners, Vacasa’s sales and marketing services are a big draw. It provides 3D virtual home tours, professional photography and data-driven, dynamic pricing technology.  Pricing and fees Vacasa’s vacation property management includes a full-service deal, including bookkeeping, marketing and 24/7 guest support. However, pricing varies depending on the needs of the property and the local market. 2. Evolve Since launching in 2011, Evolve boasts a lower-than-average property management fee, starting at 10%. It comes paired with a “risk-free guarantee,” which says they only charge their management fee once bookings are secured. Like Vacasa, Evolve offers dynamic pricing and top-notch marketing. They also don’t limit personal stays, so you can enjoy your home as much as you want. Evolve has listings in destinations from California to New England, the Southwest to Pricing and fees As far as vacation rental management companies go, Evolve is one of the most affordable. However, they don’t include some basic services like cleaning or maintenance. 3. AvantStay If your property is on the larger side, you’ll want to take a look at AvantStay appeals to property owners with specific investment and financial goals and those who want top-notch service. Owners enjoy the services of a dedicated account manager, flexible contracts and included liability coverage. Perhaps the most appealing perk may be the Vacation Club membership, where property owners earn travel credits that can be redeemed for stays at other AvantStay properties.  Pricing and fees As one of the top management rental companies, AvantStay prices and fees mirror their upscale services. You’d need a quote for their package. 4. SkyRun A collective of independent vacation rental companies, SkyRun offers second-home owners two key differentiators. First, their preventative maintenance program uses regular inspections and smart home technology to ensure your home is in good working order for every guest. Second, they don’t charge new owners any onboarding fees.    Pricing and fees SkyRun is a collective of property managers and each may have their own pricing. You have to contact a vacation rental manager and get a quote.  5. Casago Casago is a smaller, Arizona-based property management firm with a combination of resort properties and individual homes in its portfolio. Management services are available in a focused set of locations, mostly Arizona, Southern California and Mexico. However, Their full-service property management includes marketing, filing of local and state sales taxes, utility payments and everything related to renter management, like check-in and check-out, cleaning, maintenance and monthly inspections.  Pricing and fees Casago’s vacation home management pricing depends on the size of the property. They use a commission-based structure. 6. Awning Its services include: guest communication, dynamic pricing and coordination of cleaning and maintenance. Availability and level of service can vary by market, and the platform is best suited for owners seeking a more analytical and structured management approach. Pricing and fees When it comes to vacation home property management, Awning has a distinct payment structure. They optimize their pricing according to various factors, such as the size and location of the property, to maximize returns.  7. Pacaso All maintenance, cleaning and management are handled by Pacaso, so there’s no need to chase rent payments or coordinate guest stays. This makes it the best vacation property management company for those who want the benefits of second home co-ownership without the responsibilities of hosting. Pricing and fees Pacaso’s home property management costs depend on various factors, particularly your share of the property. Pacaso budgets for the year, estimating your monthly costs.  Pros and cons of using a property management company  Hiring a property management company can be a smart move for vacation or second home owners who don’t live nearby or don’t want to manage day-to-day tasks. These companies take over responsibilities, such as guest communication, maintenance, cleaning and marketing. However, that convenience may be costly. Here’s a list of advantages and disadvantages to consider: Pros of using a property management company Undoubtedly, the biggest advantage of using a property management company is knowing that your property is in good hands and renters are being taken care of. You pay for peace of mind. Also, you may get: Cons of using a property management company The biggest owner gripe you’re likely to have about vacation home property management companies is the cost. Here are a few things to keep in mind: How to choose the right vacation home management company As you compare and contrast management companies, it can seem like they’re all offering the same core set of services. Here are a few things to consider when narrowing down your choices: Build equity while maintaining your lifestyle Renting out a second home can help offset co-ownership costs, but it also comes with effort: managing bookings, maintenance, and the unpredictability of guest income. And even with the best intentions, there’s no guarantee rental earnings will fully cover your expenses.  Pacaso offers a different approach. Through hassle-free co-ownership of vacation homes in top destinations, up to eight owners Find your luxury

Did you once dream of owning a timeshare fit for luxury vacations, only to have your fantasy ruined by high fees? If so, it’s time to learn how to get out of a timeshare with little to no financial damage. As you may already know, a Getting out of a timeshare is a notoriously difficult process that can quickly eat up your time and money. Read our guide to learn the top five strategies for how to get out of a timeshare, the associated costs and who would likely benefit most from each method. 1. Use the rescission period To take advantage of the rescission period, you’ll need to write a letter to the timeshare developers with the following information:  This is one of the cheaper options to get out of a timeshare, considering you only need to purchase a stamp to send your letter. For best results, consider sending a registered letter to ensure that the timeshare company receives your document. 2. Try a timeshare deed-back However, not all resorts and timeshare developers offer this option, and you may have to be in good standing with the resort to qualify for the program.  Even if this option is available, sometimes only major life events like job loss or death qualify. Before pursuing this option, check your contract to learn Examples of deed-back programs include: 3. Sell your timeshare on the resale market If your rescission period has expired and your timeshare developer doesn’t offer a buyback program, take matters into your own hands by selling your timeshare on the resale market. Keep in mind that this option may only apply to those who have completely paid off their timeshare. Timeshares still tied to loans will be listed as “encumbered.”   One of the major 4 A timeshare exit company is your likely last resort for getting out of a timeshare. If the other methods are unavailable, you should consider working with a company that specializes in complicated timeshare exit procedures. Since there are many timeshare exit company scams on the internet, here are a few tips for how to find a legitimate contender: Keep in mind that exit companies do what you can do yourself, but simply free you from the headache of communicating with the timeshare developers. Donating your timeshare to charity seems like an easy way out of those rising fees, and you might even get a tax write-off. But it's not free. You'll still pay maintenance fees, taxes, and transfer costs until the charity officially owns it. If you want a big tax deduction, you'll also have to pay for an appraisal. Some charities might even ask for a cash donation to help cover their future expenses. 6 These legal professionals can teach you how to legally get out of a timeshare. They will help you comb through your timeshare agreement(s) for loopholes like the recession period and deed-back programs. If you try to negotiate these terms on your own, a timeshare developer may try to sway you by offering “free” upgrades if you keep your timeshare.  However, each upgrade can generate a new contract that further complicates the exiting procedure. A contract law attorney can help you make sense of these contracts and mitigate the costs of exiting. Dos and don’ts when exiting a timeshare In many cases, If you want to learn how to exit a timeshare without spending thousands of dollars or falling prey to a scam, avoid these methods: Benefits of Pacaso vs. a Timeshare These five methods — each with a different cost and level of interaction with the timeshare developers — are ways to get out of a timeshare.  If you still want to enjoy a vacation property but skip the headache of timeshare ownership, consider becoming a Some Pacaso offers real estate ownership of a luxury property without the pitfalls of timeshares. Plus, unlike a timeshare, you can sell your home through a streamlined resale process if you decide to move on. If you don't want to deal with timeshare hassle, Pacaso is another option that offers true fractional ownership of a luxury home.

If you invest in a fractional ownership of a holiday home, you'd have the right to use that property for a predetermined number of days or weeks annually. This approach allows individuals to enjoy the benefits of owning premium assets without bearing the full financial burden alone. In this post, you’ll learn what fractional ownership is, explore its pros and cons and get answers to some frequently asked questions. Understanding fractional ownership You’ll typically find fractional ownership for real estate like vacation homes. However, fractional ownership can also come into play for art, stocks and fashion. When owners purchase real estate assets with fractional ownership, they’re issued deeds representing their fraction of the property.  How fractional ownership works It may sound complicated, but fractional property ownership is pretty cut and dry. Here’s how it works: Types of fractional ownership There are two main types of fractional property ownership structures: an entity, like an LLC, and tenancy in common. Fractional ownership through an entity Some properties split ownership by using a structural entity like an Tenancy in common Tenancy in common (TIC) means each tenant holds an individual deed for a fraction or percentage of a commercial or residential property. However, no one person or company is in charge. With a TIC, individuals can own different percentages of the property but share it equally. Some TIC agreements are self-managed. Fractional ownership vs. timeshares Timeshares may be shared by as many as 52 owners (one person or group for every week of the year) while fractionally owned properties can have as few as two owners.  Benefits of fractional ownership Fractional ownership has many benefits, including shared maintenance costs and upkeep, among others. Here are some of those benefits: Expanded opportunity to own Fractional real estate investments allow you to own a portion of Deeded ownership Unlike a timeshare, fractional home ownership gives you a deed to a fraction of the property itself (sometimes called a Usage rights Unlike short-term Shared upkeep and maintenance costs Using the fractional ownership model, you're also responsible for only a fraction of the property's upkeep and maintenance. This includes taxes, HOA fees, repair bills, landscaping, utilities, Lower upkeep and maintenance burden Most fractional real estate ownership agreements include provisions for long-term property management, with owners deciding how to handle any issues. Maintenance of When you have fractional vacation home ownership through an entity, it will include preventative and Cons of fractional ownership Though fractional ownership has advantages, there are a few drawbacks to consider.  Fewer financing options Fewer banks provide mortgages for those looking to buy properties fractionally. You may need to shop around or consider other ways to Less flexibility and freedom All decisions about maintenance, repairs and decor must go through all ownership partners, which can be a hassle. If you want to sell a fractional property, the other fractional owners must approve the sale, depending on your agreement.  Some fractional property ownership clubs also require you to maintain an agreement with the club or property management company associated with the home, with no option for self-management or management outside the company. Limited travel opportunities While it's not unheard of to own shares in multiple fractional ownership properties in different locations, investing in fractional ownership also means investing in the location you’re going to revisit. Of course, you can still vacation elsewhere, but it's something to factor into your travel plans and budget.  Similar alternatives to fractional ownership Where fractional ownership falls short, Pacaso steps up. Pacaso's professionally managed LLC co-ownership model gives you all the perks and lower co-ownership costs with key differences that set it apart from fractional ownership resort clubs. Unlike fractional ownership resorts, Pacaso offers LLC

You’re ready to buy another home, but are you aware of the Whether you’re searching for a dreamy beach house or a condo in the city that can earn you extra income, this guide will show you the pros and cons of owning multiple homes. Advantages of owning multiple homes  There are many advantages to owning multiple houses, starting with enjoying the perks of having It’s important to note that owning multiple homes comes with many responsibilities, such as 1. Earn rental income Owning multiple homes gives you the opportunity to create a sustainable and passive cash flow stream. Each additional property adds to the total rental income, which can help cover mortgage payments, property taxes, maintenance costs and other expenses associated with owning multiple rental properties. 2. Diversify your portfolio Rental income from multiple homes also offers diversification. It allows investors to spread their investments across various locations and 3. Enjoy a vacation home (or two) Perhaps the biggest advantage of owning multiple homes is the freedom to travel and make the most out of your properties. Whether Disadvantages of owning multiple properties  Although owning multiple homes can potentially help you earn extra income, diversify your portfolio and grant you access to new vacation spots, there are a few drawbacks to keep in mind. Let’s take a closer look. 1. Real estate is generally considered less liquid than stocks, bonds or cash. When you own multiple properties, it can be challenging to quickly convert those assets into cash if needed.  2. With each additional property comes a multitude of costs, such as mortgage payments, property taxes, insurance, maintenance, property management and utility bills. These expenses can add up quickly, putting a strain on your finances. If you buy and sell properties frequently, owning multiple properties may also lead to higher transaction costs, such as real estate agent fees and closing costs. 3. One significant disadvantage of owning multiple homes is the challenge of property management. As the number of properties increases, so does the complexity and time required to manage them effectively. With multiple homes, the workload and responsibilities can become overwhelming for individual owners, especially if you have to go through your Financing for multiple homes can vary depending on individual financial situations and investment goals. Traditional mortgages are common, but they may become limited as the number of properties increases.  Here are a few ways you can buy multiple properties: Regardless of the method, maintaining a strong credit profile and demonstrating a reliable income stream are essential to secure favorable financing terms and ensure you can By renting out the property to tenants, you can offset some of the However, successful rental income generation requires proper property management, including tenant screening, regular maintenance and prompt response to tenant needs. With careful planning and a proactive approach, using a second home as a rental investment can offer an attractive source of passive income.  Depending on how you’ll use the property, the tax considerations differ. Here’s a quick rundown: Consult with a qualified tax advisor who can provide detailed information based on your individual circumstances and The goal is to co-own homes without the hassle. Here’s the checklist you need to keep everything ready and organized: The weekend escapes, the family holidays, the familiar getaway spot — the idea of a vacation home sounds divine. Second homes come with a lot of perks, but also plenty of responsibilities. Between the upfront costs, ongoing maintenance, and time spent managing the property, full ownership isn’t the right fit for everyone. That’s where Pacaso comes in. Pacaso makes second home ownership more accessible by offering co-ownership of luxury homes in Here’s why Pacaso is a smarter way to own multiple homes: It’s the lifestyle upgrade without the financial overload. Just show up, relax, and enjoy your second home. Pacaso takes care of the rest. Now that you’ve got the full picture of how And unlike a timeshare, this model offers real estate ownership. And with a

A You might consider Understanding second homes vs. primary residences Although you might visit a second home for weeks on end, it’s only a personal residence for part of the year. It may be vacant or rented out to others the rest of the time. By contrast, lenders expect your primary residence to take priority because it’s where you live and sleep. You can also own more than one “second” home; a second home is a property Can you have two primary residences? Generally, no, you can't have two primary residences at the same time for tax or mortgage purposes. Even if you split your time between a couple of places, only one can be your official "main" home. This is where you spend most of your time, get your mail, register your car and list on official documents. Lenders offer better interest rates on primary residences because they assume you'll always prioritize paying the mortgage on the home where you actually live. Can a second home be a primary residence? In short, no. Why does occupancy status matter? Your occupancy status matters significantly because it directly influences your financing options, interest rates and how lenders assess risk. Lenders carefully consider how you plan to use a property, as this dictates your financing options. Your primary residence, where you live and sleep, is generally easier to get a mortgage for and typically comes with lower interest rates. Lenders see these loans as less risky, understanding you're highly motivated to keep the roof over your head. Second homes are a different scenario. Although you might visit a second home for weeks, it’s only a personal residence for part of the year. The rest of the time, it may be vacant or rented out to others. These properties typically come with higher interest rates and stricter qualification requirements. You can even use a It’s crucial to be truthful about your intended use when applying for a mortgage, as misrepresenting your occupancy can lead to serious consequences, including your lender demanding immediate full repayment, additional penalties and even bank fraud charges. You can also own more than one "second" home, as it's defined simply as a property secondary to your primary residence. Can you convert a second home into your primary residence? It's worth noting that a property's occupancy status isn't necessarily permanent; you can change a secondary residence into a primary one if it meets the necessary criteria. For instance, a retired couple might choose to downsize and sell their primary home to make their long-time second home their new primary residence.  Since your property's occupancy type directly impacts the specifics of your financing, it's always wise to consult your mortgage lender before making any such changes. Understanding the difference between a primary residence and a second home is important. Knowing the difference helps plan your long-term financial planning, property management responsibilities and even lifestyle choices.  For those seeking a luxury second home without the hassle and expense, let Pacaso make it simple with

Maybe you want to achieve your dream of For many, the most challenging part of purchasing a second home is finding the time to make it happen, especially when juggling the demands of a busy life. It's not just about the hours spent house hunting — it also includes the effort involved in securing financing, managing paperwork, and potentially overseeing renovations. The following nine strategies can help streamline the process and make your dream of a second home a reality, and the best one for you depends on what you plan to do with your first home. Option 1. Get approved for another mortgage Perhaps the simplest and most familiar strategy for how to buy a house when you own a house is to apply for a new mortgage. In this strategy, a bank approves you to hold two separate mortgages simultaneously. You’ll need to have enough cash on hand to cover a down payment and the closing costs for the new mortgage. Option 2. Become a landlord Similar to getting approved for two mortgages, as a landlord you are still responsible for two monthly mortgage payments, but the rental income can help cover your payments.  If you plan to rent out your second home, read your mortgage agreement carefully. Some mortgage agreements prohibit you from renting it out or require you to get the lender’s permission.  Once you’ve confirmed you can rent out your home, get it appraised to determine how much to charge for rent. The amount you charge should cover your monthly mortgage payment on the property. Your lender may also require you to have at least 2% of the mortgage value in investments, cash, etc., to cover the mortgage if you cannot get a tenant. Option 3. Take out a bridge loan A bridge loan is a temporary loan (usually six months to a year) intended to cover the cost of purchasing a new home while waiting for your current home to sell. Also called a swing loan, a bridge loan can finance up to 80% of the value of both your new and current home. When your current home sells, you use the profits to pay back the entirety of the bridge loan and apply for a traditional mortgage for your new home. Option 4. Borrow from your investments Generally, you cannot withdraw from your retirement investments without paying a penalty (usually 10%) and potentially taxes on the amount you withdraw. However, you may be able to You must repay the loan with interest within five years. Some employers may also prohibit you from contributing to your account while repaying a loan. If you have a Roth 401(k), you can withdraw any contributions from your retirement account without penalty. If you borrow any earnings that your contributions accrued, however, you will have to pay a 10% early withdrawal penalty. Option 5. Get a home equity loan A home equity line of credit allows you to borrow against the equity in your home, but it’s not a full balance loan like a home equity loan. Instead, it’s a line of credit you can draw from over time, like a credit card limit. If you have enough equity in your home, you can use your HELOC to cover the entire Option With a cash-out refinance, you refinance the entire value of your home up to 80% of its equity. Whatever you don’t owe on the mortgage, you’ll receive in cash. For example, if you have $100,000 left on your mortgage but the home has $500,000 in equity, you’d be able to refinance up to $400,000. You would walk away with $300,000 in cash to put toward the purchase of your second home. Option If you are 62 or older, you may qualify for a reverse mortgage. Also known as a home equity conversion mortgage (HECM), a reverse mortgage allows you to borrow from your home’s equity without making monthly payments — with the expectation that you will pay back the loan when you sell your home.  Option 9. Explore other types of ownership There are other Get the best of both worlds with co-ownership For those dreaming of that perfect vacation retreat,