Find a Vacation Home on Martha’s Vineyard That Works for You
As you search for a Vacation Home on Martha’s Vineyard, please consider your needs and your and your objective. Start with one of the six Towns on Martha’s Vineyard. Do you prefer a beach or in-town location? Do you wan acreage or a smaller house with just a small yard to care for?
What amenities are important to be close to. Where is the nearest art gallery or store? Is a beach or trail nearby?
What are your goals for the property. Is this a place that only you and your family will use? Do you plan to rent it out from time to time? Or maybe you plan to be there only a couple of weeks out of the year, using it as a rental property the rest of the time.
The answers to these questions will have an effect on the other factors you’ll need to consider, from financing to taxes and maintenance.
Financing or Cash?
Are you paying cash or considering a mortgage and if financing what kind of mortgage works best for you? You may want to find a mortgage broker or direct lender to help with this process.
If you have a primary residence, you may consider a second mortgage. One main question to ask is : Are you purchasing a second home or an investment property?
Second home. A second home is one that you, family members, or friends plan to live in for a certain period of time every year and not rent it out. Second-home loans have the same rates as primary residences. The down payment could be as low as 10%, though 20% is typical.
Investment property. If you plan on using your vacation home to generate rental income, expect a down payment of 25% or 30% and a higher rate for a non-owner- occupied loan. If you need the rental income in order to qualify for the additional home purchase, you may need to have a renter with a lease in place. A lender still may only consider a percentage of the rental income toward your qualifying income.
Some people may choose to use their primary home to buy the vacation home. One popular option is a cash-out refinance, in which you borrow more than you owe on your primary home and take the extra money as cash.
How Much are Your Total Costs?
Consider the goals you want to accomplish by acquiring a Martha’s Vineyard Vacation Home, while also avoiding any home buying mistakes.
A mortgage lender can help you determine the down payment, monthly mortgage payment, and closing costs. But remember that there are other costs to consider, including maintenance of the home and landscape, utilities, furnishings, insurance, property taxes, and travel to and from the home.
If you’re planning on renting out the house, determine frequency and expected rental income. Be prepared to take a financial hit if you are unable to rent the property out as much as you planned.
What Are My Taxes?
Taxes will be an ongoing consideration if you buy a vacation home in Martha’s Vineyard.
| Town | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|---|---|---|
| Aquinnah | $6.27 | $6.39 | $6.81 | $6.12 | $5.38 | $5.35 | $5.35 | $2.18 | $4.69 | $4.32 |
| (508)645-2306 | ||||||||||
| Chilmark | $2.82 | $2.91 | $2.86 | $2.88 | $2.75 | $2.68 | $2.71 | $2.63 | $2.48 | $2.29 |
| (508)645-2102 | ||||||||||
| Edgartown | $3.03 | $3.28 | $3.35 | $3.87 | $3.87 | $3.55 | $3.62 | $3.47 | $3.70 | $3.55 |
| (508)627-6140 | ||||||||||
| Oak Bluffs | $6.79 | $7.37 | $7.44 | $7.69 | $7.83 | $8.15 | $8.11 | $7.96 | $7.81 | $7.71 |
| (508)693-5519 | ||||||||||
| V. Haven | $8.70** | $9.17 | $9.33 | $9.17 | $9.41 | $9.11 | $9.16 | $8.92 | $8.39 | $8.84 |
| (508)696-4206 | ||||||||||
| W.Tisbury | $5.82 | $6.10 | $6.07 | $6.18 | $6.06 | $5.97 | $6.06 | $5.71 | $5.41 | $4.92 |
| (508)696-0101 | ||||||||||
| Rates are per thousand dollar of assessed value–**Vineyard Haven residential rebate available up to 20% | ||||||||||
A second home qualifies for mortgage interest and property tax deductions as long as the home is for personal use. And if you rent out the home for 14 or fewer days during the year, you can pocket the rental income tax-free.
If you rent out the home for more than 14 days, you must report all rental income to the IRS. You also can deduct rental expenses.
The mortgage interest deduction is available on total mortgages up to $750,000. If you already have a mortgage equal to the amount you on primary residence, your second home will not qualify.
The bottom line: Tax rules vary greatly, depending on personal or rental use.
Looking at Other Alternatives
There are a number of alternatives to buying and financing a vacation home. For example, you may consider buying a home with friends or family members. But before you pursue an option, carefully weigh the pros and cons.
If you’re considering purchasing a home with other people, beware the potential challenges. Owning a home together requires a lot of compromise and cooperation.
You also must decide what will happen if one party is having trouble paying the mortgage. Are the others willing to cover it?
Prepare Your Vacation Home to be Rental Ready
If you do decide to use your vacation home as a rental property, you have to take other people’s concerns and desires into account. Be sure to consider the factors that will make it easy to rent. A home near tourist hot spots, amenities, and a beach may be more desirable.
Consider, too, factors that will make the house less desirable. Is there planned construction nearby that will make it unpleasant to stay at the house?
How far the vacation home is from your main residence takes on increased importance when you rent your second home. Do you need to hire a property manager to maintain the house and address renters’ concerns? This will increase your costs.
Pay Attention to HOA Rules
Local laws or homeowners association rules may limit who you can rent to and when.
For example, a homeowners association might limit how often you can rent your vacation home, whether renters can have pets, where they can park, and how much noise they can make.
Be aware that these rules can be put in place after you’ve purchased your vacation home.
Rely On Local Expertise
It’s a good idea to enlist the help of local real estate agents and lenders.
Martha’s Vineyard is a specialized market, and local real estate experts can help you navigate taxes, transaction fees, zoning, and rental ordinances. They can also help you determine the best time to buy a house in the Town you’re interested in.
Because they are familiar with the local market and comparable properties, they are also likely to be more comfortable with appraisals, especially where there may be fewer houses to compare.
In Summary…
Buying a Vineyard vacation home can be a ticket to relaxation or a rough trip. It’s imperative to know the rules governing a second home vs. a rental property, how to buy a vacation house, taxes, fees, and more…
