Buying a second home: the 5 points to watch

Acquiring a second home is a common step in our country: for tax purposes, one in ten homes is a second home. More than half of these properties are located on the coast or in the mountains, to a lesser extent in the largest cities. Among second homes owned by French households, two-thirds are owned by people over 60 and are often located more than three hours’ drive from home.

Once this overview is established, it is easy to understand that the buying process for a second home differs somewhat from that for a main residence. The property acquired must be able to be maintained remotely, be suitable for renting out to third parties if necessary and, of course, not burden the household budget with unexpected expenses.

Succeeding in acquiring a second home, without regretting it later, means paying attention to certain specific points that we will outline here.

#1 Property location

This criterion can be divided into three separate points of attention. First and although this may seem obvious, it is necessary to choose a** location suited to the use** planned for the second home. A person seeking human contact will avoid high mountains and instead favour seaside resorts or large conurbations. If, on the contrary, peace and quiet is what is sought, the countryside may prove to be a sensible choice, but beware of the lifestyle of the people concerned! The solitary calm of the countryside can become depressing solitude for anyone expecting to integrate into a paradise that ultimately lacks any activity.

Next, the distance from the main residence is a key element in the success of the project. The second home must then be accessible, by car or public transport, within a reasonable time given the original ambition. A journey of five hours, for example, to reach a second home where one plans to spend one or two weekends per month, seems too significant a constraint in practice. Conversely, a high-altitude chalet is only intended to be occupied by its owners for a few weeks per year and for rather long stays: the journey is similar to a holiday departure and can be extended.

Finally and for buyers already considering resale of the property, it is important to remain vigilant regarding the local market evolution. Does the area show potential for appreciation? Are shops developing or, on the contrary, have several closed in recent years? Through these considerations, it will be possible to determine whether the property can be resold in the medium term without loss of value.

#2 Buying at the right price

The purchase of a second home usually occurs in a region unfamiliar to the buyer, who will then have less ability to evaluate prices in that area. The record of past transactions will provide little information when it comes to a remote region with few properties.

The right approach is then to rely on a local professional, able to correctly evaluate the true value of a property and who can also support the future owner in the procedures to be carried out far from home.

#3 Taking all costs into account

Some buyers tend to forget that the purchase and use of a second home ultimately incur the same costs as for a main residence. Even if energy consumption is lower, for example, subscriptions are still charged. Council tax will also impact the budget, not to mention maintenance costs, which are all the higher as a significant distance from the main residence may require the use of a service provider.

There may also be renovation works because, like any property, a second home may require replacing the roof, hot water production equipment and other structural elements. The interior may also need regular updating, especially if the property is rented out to third parties, whether occasionally or regularly.

Insurance finally must be taken out, whether the property is let or not: no property is safe from a natural disaster, in the worst case. Note that insurance specifically designed for second homes may prove less expensive than that for a main residence.

#4 If putting the property up for rent

We mentioned the possibility of renting the property when it is unoccupied by its owner, which requires taking certain measures beforehand. While this notably makes it possible to facilitate repayment of the related loan, or even make the investment profitable, the property must necessarily be prepared to accommodate third parties.

The owners’ personal belongings that remain in the property year-round must be hidden away, in a dedicated room or locked cupboard. Equipment appreciated by everyone must be present, and not only those necessary for the owner’s sole comfort. Finally, it is essential to appoint someone for cleaning and changing the bedding between tenants.

Using an agency seems the best option, despite the cost involved: the intervention of a specialist accustomed to and guaranteeing the services provides welcome peace of mind. Entrusting one’s property to a professional can also delegate communication and booking management, which is not straightforward to handle from a distance.

#5 Beware of the fiscal impact!

In addition to council tax already mentioned, the owner of a second home must also pay habitation tax, from which only main residences are exempt.

The property thus acquired also brings additional value to the owner’s estate, which may impact the taxation applicable to them. In the event of resale of the property, the owner also exposes themselves to taxation of 36.20% of the capital gain realised. However, it is possible to benefit from a discount on this taxation of 6% per year from the sixth year of ownership of the property. Finally, the tax does not apply if the capital gain is less than €15,000 for a single person (or €30,000 for a couple).

Finally, renting brings taxable income within the scope of property income. However, and up to €72,600 in receipts, the owner can opt for the furnished letting non-professional (LMNP) status. Under the micro-BIC regime, they will benefit from a 50% allowance on the receipts made, which will be added to the owner’s other annual income to be subjected to the progressive income tax scale.

Acquiring a second home is a significant project, which deserves to be thought through and matured in the same way as buying a main residence. Meeting owners’ needs, finding an economic balance, generating additional income perhaps: the investment can prove exciting to develop!

Nevertheless, in the event of prolonged absence, it will be essential to plan for an efficient security system. Beyond a basic alarm, home automation offers astonishing possibilities: granting remote access to an occasional tenant, opening and closing shutters automatically, activating and deactivating the electrical installation and even, accessing camera images from one’s smartphone. Enough to reassure even the most anxious!