Owning a second home is useful in several ways. Besides the obvious rental income which you stand to earn, there are other advantages as well when you have a second home. Your second home can serve as a retirement home or come as a long-term investment which will allow you to reap profits through appreciation in capital value. Then there is another category of second homeowners who seek annual rent income from the day they possessed it. Renting out your second home is obviously an easier choice especially if it is around the first home where you reside.
Renting a second home provides numerous benefits alongside generating regular income which helps you maintain a healthy financial profile. It is always sensible to rent out your second home. The monthly rent you get from this will help you in repaying the EMIs of your home loans. Apart from this electricity, water & monthly maintenance charges will be borne by the tenant if it is occupied. Otherwise, you would have had to pay these if the property was vacant.
While monthly rent from the second home is the main benefit, it is up to you to ensure that the process & the property remain hassle-free. You as a landlord at the start should always perform a background check of the prospective tenant who will be moving in. You can even go for police verification if required. Check in the market for the annual rent amount charge & make it a point to be realistic. Finally, the most important thing is to have all the papers in order before entering into a rental lease agreement that covers all the required important clauses. Having a second home is always a good thing, but having to simultaneously maintain both properties can be a big task. The tenant will also keep your second home in shape & maintain because of regular cleaning.
There are tax rebates as well when you rent out your second home. Because your rental income will also be a part of your total income, it will be taxable. But then if you had taken a loan to buy your second home, you are likely to be entitled for a tax rebate by deducting the amount of money you have received as rental income. The tax benefit is attached because the deducted amount will be considered as your expense. This will in turn reduce the burden of your second home loan.
Another benefit is that the monthly rent which you receive in your account is your regular income. This will eventually enhance your loan eligibility for availing a car loan or other home loans based upon this additional income.