Many Californians are still sorting through the implications of the Tax Cuts and Jobs Act of 2017. Effective Jan. 1, 2018, this law introduced changes that may affect those looking to purchase a second home. The new rules limit interest deductions on home equity loans, home equity lines of credit, and second mortgages. These tools are often used to purchase many second homes in lieu of all cash transactions.
Second home buyers in California are not daunted. Tahoe and Carmel-by-the-Sea remain as popular as ever among those seeking a private getaway. According to U.S. census data, both ranked among California’s top 10 cities with the highest proportion of second home ownership. In Tahoe, 39.1% of homes are second homes with 38.3% in Carmel-by-the-Sea.
Fortunately, Alain Pinel's broad network of experienced agents connect Bay Area and international buyers with both communities. With our deep inventory and skilled agents, our team connects buyers to overcome the region's low inventory to identify idyllic second residences.
Once you've selected a home, there is the question of financing. Financial advisors recommend paying cash if possible. Liquidating portfolio holdings to finance a purchase remains a popular option for many. In consultation with your financial advisor, absent an all-cash purchase, you might consider taking a first mortgage on the second home rather than take a second mortgage or use the equity in your primary residence. With mortgage interest rates still at historic lows, this approach allows for low-cost borrowing.
Whether you're ready to move on that second home or still have questions, let me know if you'd like to discuss your options. I can advise you on properties, as well as connect you with appropriate financial advisors to explore a financing option that makes sense for you.