Are you thinking about buying a second home in Orlando? Many travelers from Canada and the United Kingdom come to Central Florida year after year to spend a relaxing holiday. At some point, it may make more financial sense for you to buy a vacation home in Orlando, rather than spending money on a hotel or vacation rental home. In a previous article, we shared five things you should know before buying an Orlando holiday home. Here are a few more important points to consider before making a purchase.
1. Determine the Financial Stability of the Homeowners’ Association – Many Orlando vacation homes are located in a housing development that is governed by a homeowners’ association (HOA). An HOA makes and enforces rules for the properties in its jurisdiction. It also collects monthly or annual dues to pay for the upkeep of common areas like parks, tennis courts, elevators and swimming pools.
Before you buy a holiday home in an HOA, review the financial records and copies of the meeting minutes to see how well the development is running. Ask about any deferred maintenance items like a leaking roof or bad siding that may cause the HOA to levy an assessment on the owners to pay for the needed repairs. Well-run communities normally maintain a reserve account to pay for these regularly needed repairs, so owners won’t be hit with unforeseen expenses.
2. Know about Taxes – Home buyers are required to deal with property taxes. This tax should be between 1-3 percent of your holiday home’s assessed value, per year. The assessed value is typically less than the home’s purchase price. Here are some links to the property tax estimator tools from various Orlando area counties, which will give you a more precise property tax estimate:
- Lake County Property Appraiser – tax estimator
- Orange County Property Appraiser – tax estimator
- Osceola County Property Appraiser – tax estimator
- Polk County Property Appraiser – tax estimator
- Seminole County Property Appraiser – tax estimator
If you decide to rent your Orlando vacation home when you are not occupying it, you will likely to be required to pay income tax. You can find out more about your income tax obligation by visiting the IRS web page: ITIN Guidance for Foreign Property Buyers and Sellers. If you need to pay taxes, you will need to obtain an Individual Tax Identification Number from the IRS.
If you decide to sell your holiday home in the future, most likely you’ll have to pay tax under the FIRPTA Withholding Guidelines. It’s in your best interest to seek professional tax advice from a Certified Public Accountant (CPA) before buying a home so you can make an informed decision.
3. Find a Property Manager – Because vacation property owners do not live in their property year round, it’s typical for owners to work with a management company to take care of the home and assist in securing rental bookings. One of the responsibilities at Team Donovan is to help you connect with the right company for your needs. We can help you decide whether or not to stay with existing management or contract with an outside company. Click here for more information.
4. Know the Cost of Ownership – Buying an Orlando holiday home means you will be responsible for various costs including, but not limited to property taxes, insurance, maintenance, utilities and property management fees. Team Donovan can help you determine what percentage of income you will receive, if you decide to rent out the home while not in use.
5. Know Your Vacation Home Usage Plans – What are you looking for when it comes to a holiday home in Orlando? Do you want a quiet getaway? Are you looking for a home near the theme parks for family vacations? No matter how you plan to use your holiday home, there are many housing options in Orlando to choose from, including single-family villas, condos, and townhomes.
Contact Team Donovan today for recommendations on the best locations that will meet your goals. We look forward to helping you purchase a second home in Orlando. Call 407-705-2616 or fill out our online request form.
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