The porch swing creaks as you rock gently forward and back. The afternoon sun filters through a curtain of green leaves, hitting the floorboards at crazy angles. Squeals of joy float up from the stream below, where kids are skipping rocks across the chilly water.
You consider getting up to find a long-sleeve shirt. It’s July, but it grows cool in the evenings at this cabin you’ve rented once again in the mountains of western North Carolina.
Wouldn’t it be nice to own a second home in this cool, green place, where you have to work to break a sweat, even in mid-summer?
This place in the sky would go with your place in the sun in Florida. And, the practical side of your brain reminds you, there are some tax advantages to owning a second home. Such thoughts are anything but rare among Floridians this time of year.
People from many other states buy a second home in Florida. For decades, Floridians looking to beat the heat and see some hills have bought second homes in the mountains of western North Carolina and north Georgia.
Just count the overwhelming number of Florida license plates in the parking lots of western North Carolina real estate agencies this time of year.
Bill Tapp of St. Petersburg frequently thinks about buying a second home in North Carolina. Tapp, a partner in the Pinellas County accounting firm of Kirkland, Russ, Murphy and Tapp, has rented the same house in the Cashiers area of North Carolina for five summer vacations in a row.
His family members, with four children aged 8 to 15, enjoy hiking, whitewater rafting, boating on a nearby lake, even sifting through the orange mud for the dull gray rocks that hide rubies and sapphires.
Last summer, Tapp got together with some friends who also vacation in the area to start looking for a place to buy together.
As an accountant, he was well aware of the tax implications. You can usually deduct the property taxes and mortgage interest paid for a second home just as you do for your primary home on your federal income tax return. Plus, investing in real estate might help diversify an investment portfolio and provide a bit of a hedge against more volatile stock market investments.
If you rent out that home for 14 days or less, the income derived is not taxable. If you rent it out for longer than that the income is taxable, but you can deduct a percentage of expenses for maintaining the home.
With all this in the back of his mind, Tapp was surprised when the real estate agent who was showing him around told him he shouldn’t be buying a second home for financial reasons.
“It may sound corny, but don’t let the tax situation drive the decision,” Tapp said, echoing his agent’s advice. A second home most of all should be a place you want to be and will have a chance to use.
If you are in a high income bracket (with adjusted gross income for those filing jointly of more than $124,500 this year) you won’t get the full punch of the itemized deductions, Tapp said.
Plus, a second home can be costly to repair and maintain and take a lot of extra time and trouble. You worry about it when you are not there. The costs continue even when you are not using it. And renting it out can be a hassle.
Tapp had another surprise when he was shopping. His family rents a nice house, with a lot of amenities, on a lake near Cashiers.
“We got spoiled,” he said. “The reality of it is there really aren’t that many left.” At least not at an affordable price.
For now, Tapp has put his purchase of a second home on hold.
“I still may look again, though,” he said.
While land and homes in western North Carolina have a reputation for being inexpensive, prices have risen significantly in some areas.
In the Highlands-Cashiers area, prices are “higher than a cat’s back,” said Donna Allen, a broker in the office of Glorida Durfey Real Estate in Franklin, N.C.
Floridians are one reason prices have surged.
“Half the cars in our parking lot have Florida tags,” Allen said.
But increasingly, a new crowd of young, affluent Atlantans is discovering the area, too. They are beginning to buy land in the mountains of western North Carolina and north Georgia, both only about a two-hour drive from downtown Atlanta.
“This year has been remarkable,” said Jeannie Chambers of the Chambers Agency in Highlands. “It has almost been like a feeding frenzy.”
She attributes that partly to buyers who are spending profits generated by the stock market’s rise of recent months. Some of the Florida buyers are buying for an investment, and plan to sell in a few years, but others hope to keep the home in the family forever.
“They grew up coming to Highlands as children . . . so they buy here because they can let their children experience the same thing,” she said.
Highlands is a tiny town on the side of a mountain with a busy main street full of upscale shops. There are no chain restaurants or stores in town. A trip to Wal-Mart is a harrowing 20-minute drive down a narrow, corkscrew two-lane road on which the elevation drops about 2,000 feet.
A few years ago somebody planned to build a Burger King in Highlands. The building would be palatial by fast-food standards, made of stone and wood to blend in. But residents became so agitated at the idea that the developer decided it wasn’t worth his time.
Prices aren’t climbing fast everywhere in the area, and there are still bargains to be had outside the trendy, upscale Highlands-Cashiers areas, local brokers say.
For instance, down in the Franklin area the elevation and the prices are lower.
Real estate agent Dan Hazazer of Hazy Acre Realty in Franklin said some of the nicest lots in that area go for $25,000 to $30,000 for an acre or two.
“Up in Cashiers or Highlands that would be $150,000 to $400,000,” he said.
Real estate appreciation and tax advantages seldom come to Joyce Sewell’s mind when she thinks about the home that she and her husband have owned in the Cashiers area for 18 years.
For the owner of the Write Place stationery store in St. Petersburg, the mountain home has always been a cool place of respite and recreation for her family, which now includes eight grown children.
She is spending most of the summer there this year. One recent day she was dressed in a long-sleeve shirt and jeans, comfortable in temperatures that would top out in the 70s.
“The good thing here is the weather. It’s beautiful and it’s cool.”
