All travel bugs love the sense of adventure and deep end experience that comes with overseas travel. However, when we truly fall in love with a location, it’s not uncommon for us to want to put down roots there. Thus, we buy a holiday home which we hope will provide us with a home away from home in a beloved holiday location that gives you the same sense of luxury as a hotel, yet with the familiarity and comfort of home. We may hope to retire to this property some day and most likely use it as an extra revenue stream by renting it out to our fellow tourists when it’s not in use.
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While purchasing a holiday home may not be within most people’s budgets, investing in a timeshare property can allow you to share the upfront costs and inherent running costs with others. That said, even when sharing these costs, we can quickly realize that the overhead costs of managing a holiday home can cut into our precious disposable income. In order to make a timeshare property a viable and profitable enterprise we need to find ways to cut costs wherever we can. With that in mind, here are some ways in which you can save money on buying and running your timeshare property...
Save a hefty downpayment
Of course, saving money on a second property, whether it’s a holiday home or an investment property starts with your mortgage. Needless to say, you should do your homework and take the time to find the best housing loan, but that’s just the beginning of where you can save. If possible you should aim to put down a hefty down payment. Typically on second homes the minimum down payment is around 10% as opposed to 5%, but you can save considerably if you’re able to put down a deposit of 20% or more. This will prevent you from having to pay Private Mortgage Insurance (PMI) which usually runs between 0.5% and 1% of the full loan every year. This might not look like much on paper but it’s an expense that you and all who you share the property with could do without.
Take advantage of tax deductions
If you purchased your holiday home exclusively for your own personal enjoyment and not as an investment property, don’t forget that this makes you eligible for certain tax breaks. There are numerous deductibles on a timeshare property including;
- Maintenance fees- Please note that these are only a taxable expense if you and your fellow investors rent out your timeshare.
- Loan interest payments- If you used a secured loan to co-finance the property, the interest you pay is tax deductible.
- Property tax deductions- If your property taxes are billed separately from your maintenance charges, these also qualify as deductions.
Keep an eye on energy use
With so many energy tariffs on the market, it behooves you to select one that’s appropriate for the property’s use. For example, if you will use it predominantly as a holiday home and renting it out for very limited periods, it’s likely that it will be consuming little or no energy for the majority of the year. With this in mind, it makes no sense to select a tariff that will give you a great price on energy that’s not being used. On the other hand, if your property will be used for most of the year, it helps to monitor the usage and select a tariff that gives you a great deal for how much energy you’re using and when. Compare prices regularly to ensure that you’re saving as much as possible on both of your properties. No matter how much usage the property gets, installing energy smart measures like energy saving CFL bulbs is a great way to drive down your overheads.
Make sure your vacation property is water smart
Even if you’re very conservative in your water usage at home, if you’ll be renting out your holiday home, there’s no guarantee that your tenants will be quite so water (and cost) conscious. As such, it’s a great idea to install some water saving features. Most of them are relatively inexpensive and easy to install and while some may result in some upfront costs they will invariably save you money in the long term while also helping to conserve one of our most precious natural resources;
- Water saving dual flush toilets
- Gray water showers
- Water saving shower heads
- Water butts for the garden
Although the maintenance costs are offset by the contributions of others when you invest in a timeshare, it’s still in your best interests to strive to keep costs down where you can and take advantage of the unique tax benefits available to timeshare holders!
Are you already a timeshare owner or looking to buy one?
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