KEY POINTS\r\n\r\n \tHow to find your weekend home in the mountains and make money.\r\n \tConsider how often you would live there, if you would rent it out, and if the property would appreciate.\r\n \tFigure out which mortgage financing plan works for your lifestyle investment below.\r\n\r\n\r\n\r\n\r\n\r\nAs a changing work life makes it easier to work from anywhere around the world, homebuying decisions have gotten more complex. You might spend most of your workdays in the city, but your job is flexible enough that you could actually get some use out of a vacation home in the mountains, where property is cheaper.\r\n\r\nWith the right planning, attaining the vacation-home-in-the-mountains lifestyle is easier than you might think. And if you\u2019re excited to make the dream a reality, it starts with understanding your objectives in the context of how property investing, mortgage financing and tax rules work.\r\nDefining Your Lifestyle Objectives\r\nThe term "vacation home" often implies owning a second home only after you own a primary residence, but that\u2019s not a rule. It's a lifestyle choice, so buying a home that's not intended as your primary residence is often called \u201clifestyle investing\u201d \u2013 and you don't have to own a primary residence first.\r\n\r\nIf you\u2019re considering making a lifestyle investment, there are 4 long-term goals you\u2019ll want to consider first:\r\n\r\n1. Extent of personal use \u2013 How often will you inhabit the property yourself?\r\n\r\n2. Rental income \u2013 Is this something you want, or need, to offset costs when you're not using the property?\r\n\r\n3. Property appreciation \u2013 Consider this, and don't forget about offsetting maintenance costs over time, too.\r\n\r\n4. Future plans \u2013 Is there a possibility you would live in the property full time in the future?\r\nProperty Use, Financing And Tax Options\r\nBased on your assessment of these 4 goals, you'll then decide which property ownership option is most suitable from usage, financing and tax perspectives. When it comes to getting a loan, there are 3 options for you to consider:\r\n\r\n1. Primary residence loans are used for buying a home to live in. Good news about a primary residence loan is, you can buy for as little as 3% down (if the loan doesn't exceed $417,000), mortgage rates are the lowest they can be, and you get significant homeowner tax benefits. You must live there for at least one year, and then you can rent the property out as much as you want.\r\n\r\n2. Second home loans are intended for buying a vacation home for personal use only. With a second home loan, you can buy for as little as 20% down, and mortgage rates and tax benefits are the same as primary residences. But make sure you read the fine print on your lenders' second home loan \u2013 most agreements say you can't rent the home out.\r\n\r\n3. Investment property loans are for buying a home you want to rent out. These loans allow you to use the home when it's not rented, and the rental income can help you qualify. Rates are between 0.25% and 0.375% higher than second home rates, and while you can sometimes get a rental property loan with 20% down (if the loan doesn't exceed $417,000), down payments often start at 30%. If rental income exceeds expenses each year, the income is taxable. If expenses exceed rental income, these losses can create lower taxable income each year, or the losses can accrue as an offset to capital gains taxes when you sell. Be sure to ask your tax advisor which one fits your tax profile.\r\nWho Can Advise On Your Best Approach\r\nFor expert advice on a lifestyle investment that fits your needs, it\u2019s helpful to seek out a real estate agent and lender to get started. You can also talk to a financial advisor to discuss how a lifestyle investment fits into your overall investing strategy.\r\n\r\nOnce you have a real estate agent, they\u2019ll help you find homes, clarify local transaction fees, taxes and commissions, and advise you on local zoning and rental rules.\r\n\r\nYour loan advisor will help analyze your options, asking questions like: can you afford to own in the city and the mountains? Or, is it better to rent in the city and buy in the mountains where it's cheaper? And if so, they\u2019ll show you which of the three options above is eligible given your employment profile, and most efficient from a budget and tax standpoint.\r\n\r\nIf you\u2019re thinking about making a lifestyle investment, keep these tips on hand to help you through every stop of the process. Happy house hunting!