Retirement Relocation Planning Tips For Dual Homeowners
As retirement looms on the horizon, you may anticipate spending more of your time in a bright sunny climate. If you'd like to spend part of the year in a second home, you'll need to consider the best way to pay for and maintain two separate residences. Retirement relocation planning involves taking steps to make sure you're financially prepared and have the necessary funds to enjoy both of your homes when the time comes to stop working.
Plan for the Costs of Two Homes
Many retirees want to remain close to friends and family, but still long for an escape from harsh northern winters. Even if you choose to downsize your primary residence and buy two smaller properties in different locations, dual homeowners should still budget for added expenses. Real estate taxes, property insurance and the upkeep of two homes are just a few of the costs you'll need to pay out of your retirement income.
You may choose to defray some of these costs by purchasing a second home before you intend to use it and renting it out. If the property is located in a popular vacation area, you may be able to generate income to cover some or all of your mortgage payment.
Choose Your Primary Residence Carefully
Owning two homes in different states may affect your tax position. According to the IRS, you'll be asked to declare one property your main residence, which is normally where you spend the most time. You can also deduct some costs, including the mortgage interest of a second home, according to the IRS. Some states offer more local tax benefits to homeowners than others. If you're not sure how to handle two homes for tax purposes, seek the advice of an expert to determine how you'll handle year-end reporting.
Factor in Cost of Living
Owning homes in two different geographic locations means you'll likely face differences in cost of living. Vacation areas may charge more for basic staples such as food and gas. You'll also need to work out your health care in two different states. Finding new doctors for ongoing care may present a challenge. Also, you'll need to understand what's covered by your current health insurance when you live out of state. The cost of traveling between homes should also be considered, depending on how frequently you plan to go back and forth.
Many retirees yearn to simplify their life and live off their hard-earned retirement income in a mild climate. If you dream of spending part of your golden years in a second home, you should be able to achieve this goal with proper retirement relocation planning.