The House, The Boat, and then The Bach
Considering a Holiday Home: Here's What You Need to Know
As summer begins, many business owners dream of owning a holiday home—a serene retreat to unwind and an asset with potential financial benefits. If you’re considering making this dream a reality, thoughtful planning is essential. Here’s a guide tailored for New Zealand business owners to navigate this exciting investment opportunity.
Define the Property’s Purpose
Determine how you intend to use the holiday home. Will it be a personal getaway, a family retreat, or a short-term rental? Your plans will influence location, features, and financing options. Properties intended for short-term rentals may also have unique legal and financial implications.
Understand Financial Requirements
Holiday homes require a 20% deposit, making them more accessible than traditional investment properties that often require 30%. However, banks assess affordability based on personal income rather than potential rental income. It’s crucial to ensure your finances can support this additional mortgage.
Research Tax Implication
Income earned through short-term rentals like Airbnb is taxable, and special rules apply to deducting expenses. If your holiday home exceeds $60,000 in rental income annually, GST obligations may also apply. Consulting a tax advisor can help you navigate these complexities.
Plan for Maintenance and Management
Owning a holiday home comes with maintenance responsibilities, including cleaning, repairs, and property management. Decide whether you’ll handle these tasks or hire a management service, especially if the property will be rented out.
Check Local Council Regulations
Some regions, like Queenstown, have strict rules for short-term rentals, including registration and zoning requirements. Ensure compliance with local regulations to avoid fines or other complications.
Leverage Your Current Assets
Consider how your primary home or business assets can support your holiday home purchase. Options like leveraging equity or withdrawing capital from your business can provide additional funding pathways.
Summing It Up
Buying a business in New Zealand is an intricate process, but by following these 10 key steps, you can navigate the journey with confidence. The right combination of research, professional advice, and strategic planning will help you find the right business opportunity and set you up for success.
Partner with Finance Link for Expert Guidance
To make this journey smoother, Finance Link is here to help. Our experts can guide you through planning and leveraging your primary home and business assets to support your dream holiday home. Contact us today to explore your options and make this summer the start of something extraordinary!