Before retirement may be the best time to buy a second home

Waiting until retirement to buy your second home in Delaware may not be the best option. Buying the home before retirement provides certain advantages that a delayed purchase cannot give. With many retirees experiencing lower incomes upon retirement, buying a second home before then allows the retiree to budget the costs in especially if the home is financed.

There are some tax benefits to purchasing a second home including taking the mortgage interest deductions on your federal taxes. US News rates Delaware as one of the “lowest effective real-estate tax rate” at 0.53 percent. Prepping for retirement requires a long-term view of the investment including the amount of time spent in the second home. Additional deductions may be available for those considered residents such as homestead exemptions.

Washington’s Top News states the market has recovered back to 2003-2004 prices since the Great Recession of 2008. The prices are stable, yet new homeowners can expect tighter lending regulations. It may be easier to secure a mortgage while still gainfully employed. Beyond property taxes, the state also has closing costs including the realty transfer tax.

The property taxes are able to stay low thanks to the realty transfer tax, but that can increase the initial costs of purchasing the second home. Beach front properties often require flood insurance. Who cares for the home when the owner is not around is another cost retirees need to factor in. Having the time pre-retirement to cover the initial purchase costs and budget well can give retirees the ability to enjoy their second home and the tax benefits of the state.



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