Have you always dreamed of buying a holiday home on the coast or in the Ardennes? Purchasing a second home is increasingly attainable. These days, the supply is so wide that there is something to suit every budget. Ready for the dolce vita? Before you go ahead, though, you should weigh up the benefits and drawbacks carefully.
The benefits of buying a second home
Fancy a long weekend or a well-deserved break? Your holiday home is there waiting for you, whenever you want to use it.
When you’re not using it yourself for a while, you can structurally rent out your second home. You could, for example, consider a 3/6/9 contract. You can use that income to pay off your loan, and with a bit of luck, have a little extra to spare.
A second home can also be an excellent investment for the future. And your children or grandchildren can benefit from it one day as well. Or you can sell at a profit when you reach the end of your career, and use the proceeds to fund your retirement.
Good to know: a loan for a second home could save you money in tax, as it’s partially deductible as a form of long-term saving. Declaring repayments of up to 2 350 euros (2019 income) or 2,390 euros (2020 income) in your tax return offers you a tax break of up to 30%, provided you meet a number of conditions.
You can also deduct interest payments on the loan from the taxable property income.
But there are always downsides
Don’t forget that a second home also brings a lot of costs with it: insurance, maintenance, water and heating. You don’t always think about these things, but if you buy a second flat, you also have to contribute to the cost of maintaining the lift and the entrance hall.
Have you bought yourself a chalet in a vacation park? If so, the annual costs – depending on the facilities offered by the park and the size of your chalet – can add up to around 5 000 euros. Prefer a little apartment with a sea view? In that case you need to remember that the wind and salt can also drive up your maintenance costs.
Local councils often tax second homes. And you might also be liable for provincial tax and additional environmental levies. What’s more, you do not qualify for a reduction (e.g. for dependent children) on the property tax you have to pay each year on your second home.
And talking about taxes, you are required to declare an additional property, even if you do not rent it out. You will be taxed on the non-index-linked rateable value, plus 40 percent.
Buying a second home: a smart investment?
The answer depends on whether you buy with your heart or your pocket calculator. Decide in advance precisely what you want and expect. And above all be realistic. Buying an expensive apartment on the seafront in order to rent it out will probably not raise enough to justify the purchase. But what if you buy a nice little house by the seaside for you to enjoy with your whole family for years to come and then sell it on later? That certainly constitutes a smart investment.
Whether you are buying a second home as an investment or to enjoy yourself during your holidays, don’t rush your decision and carefully consider all the benefits and drawbacks first.
Calculate the feasibility of your plan
Are you planning to buy a second home? Use our handy tool to check quickly whether your plan is feasible.