Buying A Holiday House

Holiday houses rarely make great investments - but they can do wonders for your lifestyle! If you're looking for a tree or sea-change home of your own, check our Top 5 holiday home management tips first, and find out if you can really afford your own patch of paradise.

1. Looking for Capital Gain From Your Holiday Home?

As well as choosing a place you'll be happy to holiday in every year (or weekend), make sure it's within two hours of a capital city and has those desirable 'lifestyle' attractions - like a village atmosphere, farmers market, beach or vineyard nearby. Yes, those are also the most expensive areas - so look for nearby (and less popular) towns with good potential.

2. Ongoing Costs will be Higher... Ouch!

As well as land tax, rates, and utilities, you'll pay higher property management fees than for permanent tenancies, higher maintenance costs with all those people coming and going, and your holiday house may be vacant most of the year.

Holiday renters have high standards nowadays - so DVDs, Foxtel, BBQs and quality appliances are basically essential. You can save money by managing rentals yourself through online booking websites, which just charge a flat fee for each booking.

3. Tax Rrelief is at Hand

Many investors use their holiday home for a few weeks or months each year, and make it available to rent for the remaining time. You can claim pro-rata costs for the time that it is available (whether it's occupied or not). These costs include depreciation, renting costs, maintenance, mortgage interest and inspection visits.

4. Protect Your Holiday Home Investment

Make sure all your contents are covered with insurance, as theft risk is high. Rural areas are also more prone to flood or bushfire damage, so make sure you're also fully covered by buildings insurance. You may also want to take out public liability insurance and landlords insurance.

5. Think You Can't Afford It? Take a Share Instead.

You may also want to think about shared ownership of a holiday home. You can get together with friends or families to buy a holiday house as tenants in common. The idea is that you can share the cost, but also the enjoyment - and the capital gain. Make sure you draw up a clear co-ownership agreement, covering everyone in case one party dies, wants to sell their share, or defaults on their loan. And set up a roster so everyone gets a turn at the beach house for Christmas.