13 Reasons Selling Your Vacation Home Could Backfire

This post may contain affiliate links.

The idea of selling a vacation home sounds good when you have to deal with the increasing pressure of rising cost, maintenance and need for financial flexibility. But it’s not always the solution that it seems. Yes, you’ll probably be able to get a good price for the item, but the long term consequences may be worse than the short term gain. That once charming retreat from the everyday grind can be a regretful decision if you’re not careful.

Before you put your vacation home on the market, you need to consider all the possible downsides. You might be dreaming about what you could do with the proceeds, but you may not be ready for the financial, emotional and logistical toll selling can take.

Selling During an Off-season

15 Disappointing Truths About Retirement They Never Told You — Image Credit: OleksandrPidvalnyi/ Pixabay

You may not get the best price if you’re selling your vacation home in a slow season or in a less than an ideal market. A lot of vacation destinations have a peak demand time of year so you could miss out on their best selling season if you sell at the wrong time. If you sell at a down period, you may be left with much less money than you hoped.

Dealing With Later Remorse

Just like when people make a big decision, it’s not uncommon to feel remorse when selling your vacation home. After the sale is final, there is often a bit of regret in looking back. If you’re paying more for temporary accommodations now, or traveling further to find something similar, you might find yourself missing the property. That sense of loss can slowly creep up on you and you can start to wonder whether selling was the right choice.

You’ll Have Lost a Personal Getaway

Your vacation home isn’t an investment, it’s your personal retreat. When you sell it, you’re potentially trading in your way out from the stresses of life. Your vacation home is a place to kick back and recharge, be it a zen cabin tucked in the hills, or a whimsical house in close proximity to the beach. You might not be able to find a similar location for your next vacation, and it might not be as easy or affordable as you’d like.

The Rental Market Fluctuates

If you’re selling a vacation home where you’ve been getting rental income, you may not have been paying attention to fluctuations in the rental market. It could be a start of the area rental boom that you wanted. The income you are losing out on by selling your property is an income stream that could have been a big part of your overall financial picture.

The Challenge of Finding Another Property

13 Secrets Realtors Don’t Want You to Know — Photo Credit: Pexels

The market for new vacation homes isn’t always easy to navigate, especially if there’s a high demand or limited supply. When you sell your property, you may discover that you cannot replace it with something of equivalent location, features and charm. Finding another property in your price range could be the challenge and you end up looking at alternatives that don’t quite tick your boxes.

Hidden Costs of Selling

Woman Counting Money and Paying Bills with Sadness — Photo Credit: Karolina Kaboompics/Pexels

It’s not as simple to sell a vacation home as you might think. There may be unexpected costs beyond the agent’s fees and taxes that you didn’t expect. According to SmartAsset, some jurisdictions impose such heavy capital gains taxes on properties that were sold for a massive profit. They might pay other hidden costs such as repairs or updates before listing the property, staging and marketing the property. These expenses could be eating into your profits.

Maintenance and Upkeep Costs

The high maintenance cost of the property is one of the main reasons people consider selling their vacation homes. But you may not know that the cost of carrying these costs can be offset by rental income or the occasional getaway. If you sell, you’ll be out of the money you could make by balancing the upkeep against the revenue you get from renting out the home to others.

Your Emotional Attachment

A lot of people sell their vacation homes thinking it’s just a property transaction. But that property is usually full of memories, family vacation, celebrations, and quiet peace. It can be hard to part with the emotional ties to it and you may come to regret selling after you’ve made a move. Perhaps that cozy cabin by the lake, or that sunny beach house where happy memories were made, has you wanting to keep it because how could you possibly give it up?

The Tax Benefits of Ownership

According to the IRS, if you own a second property, there are all kinds of tax benefits that come along with it, like deducting mortgage interest, property taxes and depreciation. If you sell your vacation home, you may lose these benefits. The tax benefits of ownership can easily outweigh the financial gain from the sale, leaving you with fewer tax saving opportunities in the future, if you’re not careful. If you want to reduce your tax burden, it might make more sense than you think to keep the property.

You May Miss Out on Future Value Appreciation

Rising Real Estate Prices — Image Credit: Geralt / Pixabay

It’s so easy to simply stay in the present and forget about the future. Something that doesn’t seem like a good investment today could be very worth it in the future. If your vacation home is located in an area that is in the early stages of a growth boom, you will miss out on super appreciation in property value. Like anything else, the housing market fluctuates, and you want to take the money and run, but you could end up wishing you hung on a little while longer.

Personal or Family Legacy

Family Photo of Parents with Four Children — Photo Credit: Pexels

For some, a vacation home is legacy. It could be passed down in your family from generation to generation, bringing a link to the past, and providing a place to bring the family together for years. When you sell the property, you may be shutting down a family vacation tradition that has been passed down for generations. If the financial part of the decision dictates that you should sell, you may wind up with family members who feel disconnected or disappointed.

Disclaimer: This list is solely the author’s opinion based on research and publicly available information.