Financing the Purchase
If you are purchasing vacation rental property, you will probably need a mortgage. Even if you have resources available to make the purchase, taking out a mortgage is typically advantageous because the mortgage interest is tax deductible as a business expense. So if even if you do have the capital outlay to close the deal, holding a mortgage could be to your advantage particularly when the vacation home is used exclusively as rental property. Check with your lender on the availability and types of mortgages that are best suited to your investment goals.
Individual and Multiple Person Ownership
Most individual real estate holdings represent sole ownership; that is, the title to the property has only your name on it as owner. But if you have others go in on the deal with you, there are several ways to set up the mortgage that is appropriate such as ‘ joint tenants’, ‘tenants in common’ or as ‘tenants by the entirety’. Each of these forms of ownership has advantages and disadvantages, depending on your situation. You can also form a company to own property. It would probably be, in this case, a partnership or limited liability company.
