A second home: slim investment or just wonderful enjoyment?

A second home appeals to the imagination. A place of your own that you enjoy, that you can rent out and that increases in value. But how attractive is such an investment when you also consider taxes, costs and realistic returns?

Let's look at it step by step so you can make an educated choice.

What do you actually want to achieve?

The most important question comes at the beginning. What do you want with your second home? Are you primarily looking for a nice place for yourself, where you will occasionally allow guests? Or do you want maximum rental income?

The more often you use the property yourself, the less you can rent out. But on the other hand, how important is flexibility and self-use to you?

The numbers at a glance

Costs to consider:

• Aankoopprijs en overdrachtsbelasting<
• Any renovation or furnishing
• Periodic maintenance and replacement
• Insurance, municipal taxes and any park fees
• Rental management and cleaning

And what does it provide?

Depending on location, season, comfort level and house type, a second home can generate between 10,000 and 40,000 euros per year when actively rented out.
Value appreciation also plays a role. In popular regions, second homes have greatly increased in value in recent years.
In addition, in some cases VAT refunds are possible with business rentals.

Example of return

Suppose:

• Purchase price: €325,000
• Annual cost (maintenance, taxes, management): €9,000
• Rental income at 30 weeks of rental at €1,200 per week: €36,000
• Net income: €27,000

That works out to about 8.3 percent gross return. Net is around 5.5 to 6 percent, depending on your financing and tax burden.

Note: Take into account seasonality, local regulations and the risk of temporary vacancy.

Tax and regulation: here's what you need to know

• The home falls into Box 3 of the tax code. You pay tax on a notional return on the value of your home, not on your actual income.
• In some cases, you can reclaim VAT on the purchase and furnishings in business rentals
• Municipalities can set rental restrictions, such as through permit requirements or rental caps.

Get proper advice on this from a tax professional or wealth advisor.

Less worry, more return

A second home is not a full-time job, but it does deserve attention. That is why it is wise to work with an experienced park manager or rental organization. This will save you time as well as stress.

In addition, make sure you have good damage and liability insurance. And also consider locations outside the known hotspots. You can often find great opportunities there with less risk and more stable returns.

Is a second home something for you?

Whether you dream of freedom, profitability or a fine combination of both, a second home can be a worthwhile investment. With the right expectations, good partners and a clear goal, you'll get the most out of it.

Are you ready to take the next step?
Are you moving from orienting to investing?

Get inspired, get good advice and discover what is possible for you.