With much of life in New York City now at a standstill, and questions remaining on when things can return to normal, those with the option to do so have begun moving into their vacation homes. Such a move though, requires a bit of readjustment, especially if you’re thinking of making a move permanent. Here we’ll walk you through the steps to make the transition as smooth as possible.
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How Long Are You Planning to Stay in Your Vacation Home?How Long Are You Planning to Stay in Your Vacation Home?
This is a very personal question, and each person will have their answer. Take some time to decide what’s best for you and your family. Those with children will need to think about schooling. Anyone who still has a business in New York City will need to make regular commutes into the city. If you’re planning to work from home, then you may need to make some changes to the home. Keep this question in the back of your mind after you’ve made the transition. Who knows? Perhaps after a few weeks, you’ll decide to make your move permanent.
Does the home Require any Renovations or Upgrades?Does the home Require any Renovations or Upgrades?
Vacation homes tend to have a lot less wear-and-tear than primary residences. However, after a few weeks of staying there, you may find they have more problems than you initially thought. Have a home inspector or building contractor evaluate the home before you move in. The sooner you can catch a problem, the better it is for both your wallet and mental health.
Consider what’ll you’ll need to make the home more comfortable for a long-term stay. Depending on how long you’ll be staying, you may need to reconfigure a few rooms to better accommodate your new habits. For instance, changing a guest bedroom into a home office, getting new furniture, or setting up a space for homeschooling. If you are working from home, then you may need to think about how to divide up areas to make downtown easier. Out here, you can’t just pop down to Starbucks when you need a break. You’ll be restricted to the home, for the most part, so you need to think about how you can relax when you need it.
Those who are looking at a more permanent change are considering renovation projects, such as upgrading the kitchen or building additional spaces. If you can already see yourself someday retiring in this home, then these kinds of investments can pay off. However, you’d be advised to hold off on any major renovation projects for the time being. The pandemic has seriously disrupted supply chains, so you may be on a long waiting list for materials that have to travel long distances. As a workaround, you could look into renting prefabs if you need to host in-person conferences or need the extra space.
Do You Ever Plan to Sell the Home?Do You Ever Plan to Sell the Home?
If you ever plan to sell your vacation home, you may want to research the taxable exclusion of $250,000 ($500,000 if married and filing jointly) in gains from sales of primary residences. To qualify for this exclusion, you have to treat your vacation home as your primary for no less than two of the last five years before selling. Make sure to talk with your tax advisor about this to see if you can qualify for this exclusion.
Checklist for Moving into Your New Primary HomeChecklist for Moving into Your New Primary Home
Once you’re ready to move in, start working through this checklist to ensure everything is good to go.
Have the Utilities turned on in Your NameHave the Utilities turned on in Your Name
You’ll need to contact the utility companies providing water and electricity to the home and have them registered under your name. This is as easy as calling and informing them of the change.
Contact Your Insurance Company and Change Your PolicyContact Your Insurance Company and Change Your Policy
If the property previously had landlord insurance, you’ll need to change it to a homeowner’s policy. This will cover your personal property and should be a good deal cheaper than what you previously paid for landlord insurance. This is because rental properties have a higher risk due to the need to protect landlords against injury claims from tenants.
Notify Your Bank, Employer, Creditors, and Service Providers of the Address ChangeNotify Your Bank, Employer, Creditors, and Service Providers of the Address Change
As with your utility companies, you’ll need to contact other individuals and services and inform them of your change of address. This should be done through a change of address form at your local post office.
Visit Your County Property Appraiser’s Office to File for HomesteadVisit Your County Property Appraiser’s Office to File for Homestead
New York State residents can take advantage of the State School Tax Relief Program (STAR) homestead exemption. This will lower the amount of a property’s value that you can be taxed on. To do so, you have to visit the county appraiser’s office in person. There will be a deadline for this. For most counties, March 1st is the filing deadline, though some counties will have their own date. Contact your local assessor’s office to confirm your county’s filing deadline. Apply as soon as you begin occupying the home to avoid missing out on a tax break.
List Your New Address on Your State and Federal Tax ReturnsList Your New Address on Your State and Federal Tax Returns
Even if you’re declaring rental income from the home for part of the year, indicate the property as your primary residence. Remember, under Section 121 of the Internal Revenue Code, single taxpayers can exclude gains of up to $250,000, while couples who file jointly can exclude $500,000. You can only file for this primary home exclusion once every two years.