How to finance a vacation home


Here are three of the week’s top pieces of financial advice, gathered from around the web:

Financing a holiday home
Renting out a vacation home is a great way to defray some of the costs of a property “purchased primarily for family fun,” said Anya Martin at The Wall Street Journal. Thanks to historically low interest rates, nearly two-thirds of the vacation homes purchased in the U.S. last year were financed with a mortgage. Those who rent out their holiday homes make an average of $28,000 in annual rental income, covering a hefty chunk of their mortgage payments, according to surveys by But before accepting renters, make sure you read up on local regulations; some municipalities “require owners to collect occupancy or lodging taxes” from short-term guests. And before buying a second home, be sure that you can afford the property taxes, insurance, and upkeep, because those expenses remain even when you don’t have renters.

How patience pays
Want to know the secret to health and wealth? A little patience, said Adam Creighton at The Wall Street Journal. A new study has found that “patient people grow richer and healthier than their more impetuous peers.” Researchers examined elderly Americans’ willingness to delay financial gratification, asking 600 respondents how much they’d be willing to accept in a year’s time instead of $100 today. More than half said they’d want to receive at least $160 to wait a year for the payout. But wealthy respondents were typically more willing to accept a payment closer to $100 — a more realistic rate of return on an investment — than their less well-off counterparts, and were also less likely to smoke, drink excessively, or miss doctor visits.

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Toughening up the “death tax”
Dodging the “death tax” is about to get a lot more difficult, said Renae Merle at The Washington Post. The estate tax is only levied on estates worth more than $5.45 million per person; anything above that level is supposed to be taxed at 40 percent. But sophisticated tax tactics mean that most families pay less than 16 percent. “Really, anyone who is not on death’s doorstep” and has a good estate planner “can get the rate down to zero,” said tax attorney Robert Lord. Now the U.S. Treasury is proposing new rules that will make it harder for families to avoid estate taxes, including new restrictions on “deathbed” transfers and tactics used to artificially lower the value of transferred assets. The proposals are subject to a 90-day public comment period.

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