What are the concerns when buying a new primary home, and keeping other as 2nd residence?

Question

I own a 2bd/ba condo in a ski town. I bought it in Feb of 2005. Because of circumstances way beyond my control, I have to move away, perhaps indefinitely.
It is possible that I will return in a year, or find that over the next 12 months I have to sell. At this stage, the investment is increasing at 7% a year. I expect that trend will continue for the next 15 years, or longer.
If I buy another home, what concerns should I consider, ie taxes, second-home owner, rent out the 1st place, etc.
I will also be moving out-of-state which I know changes some tax or something... From Colorado to Wisconsin

Answer 1

aside from affording everything, u want to avoid things like a cold climate and an unoccupied house where the heat goes out and all the pipes freeze and burst and the insurance wont cover it. in a nice area where i live a house had to be condemned cuz it was a second home and that exact thing happened and they did not have enough cash to pay when insurance only paid for half.

Answer 2

Most likely you can't afford the mortgages on the condo and new home. So your options are straight forward. You can sell the condo and purchase a new home, or you can rent out the condo and purchase a new home. Selling and purchasing are easy enough. When you rent, if you get faithful and responsible renters, you have no worries. The renters from hell are any owners nightmare. Payments late or not made at all. Holes in walls appear. Eviction proceedings. Turn key repairs. As for taxes, you get a break on rental property. You can declare losses. Trips made to rental property, repairs, and whatever you pay out are allowed losses. Some repairs like a whole new roof has to be averaged out throughout the life of the Depreciation Schedule; other repairs can be deducted in the same year. You report payments made to you including the interest paid. It's not all that difficult. You have to decide if you want the hassle of renting but the benefit of income and better resale down the road, or a quick no muss no fuss sell and buy.

Answer 3

First if it just sits empty you could end up to have to replace many things. If your house is near some place that is very well traveled you should put it with a real estate company or management company to rent it out for you. This would generate some income, and maybe cut some of the expenses. It all depends on the management company and their cut.
If I were in your shoes I would develope a web site and take my own orders for renters. The only thing left would be to hire a general laborer to come in after each guest and repair any damages. The contracts are fairly easy to draw up. Most people who would rent a house would take care of it.

Answer 4

since you are going out of the state then the two local property tax departments wont know you are claiming two homestead exemptions. that is the first thing you can do to maximize your position. due to the appreciation of the home i would keep it and rent it out. make sure you pick a good management company in the area to manage it. You dont want a call for a repair when you are in another state. on you federal return just have it as your second home. you still get a reduction of your income taxes from the mortgage interest expenses also. good luck. then do a cash out refinance and use the money to buy another one and do the same thing... you should buy one house per year and have them managed professionally. just make sure they generate a monthly positive cash flow..

good luck

Answer 5

you could rent the one you are not using that often but the taxes will be high so you have to consider that into account if one can be used for business puroposes you can write it off