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When should you sell your cold-weather home?

Jan Dusold and her husband, Edward, originally bought a second home in Florida to live in for just half the year, spending the remainder in their hometown of St. Louis to be close to children and grandchildren.

Not long after, the couple decided they liked their Punta Gorda lifestyle more, and the cost of owning the St. Louis home while they were away was adding up to the tune of $18,000 annually.

Once, after several months in Florida, they came home to a slow sink leak that had damaged their home. They decided to sell and opt for a three-month furnished lease in their hometown once a year for a net savings of nearly $14,000. They'll invest the proceeds of the sale or possibly start a small business, ultimately living life more simply and comfortably.

About 64 percent of retirees said they are likely to move at least once during retirement, with 37 percent having already done so and 27 percent anticipating doing so, according to a survey by Merrill Lynch and Age Wave.

For many retirees, owning two homes can make financial sense, while for others, it is an unnecessary expense. Experts suggest afew tips for figuring out which it is for you:

Focus on the lifestyle you want

Jan and Edward Dusold in front of their St. Louis home.
Source: Jan and Edward Dusold
Jan and Edward Dusold in front of their St. Louis home.

If you rent the "snowbird" home, you may lack the familiarity and continuity that allow you to develop and build relationships, or make it truly feel like home, said Steve Martin, a CFP and advisor at Oasis Wealth Planning Advisors in Nashville, Tennessee.

However, the flexibility to move around may be more attractive to others. "Renting would provide flexibility to evaluate the city and type of living arrangement that one desires. If they don't plan to stay more than three to five years in one location, then renting is generally the preferred choice," he said.

If the second home will only be used a few months a year, it makes sense to let a landlord take care of time-consuming repairs and maintenance so you can focus on enjoying yourself, said Steven J. Weil, president of RMS Accounting in Fort Lauderdale, Florida.

Weigh the costs and the hassle factor

"While the convenience of having two properties may be nice, it typically does not outweigh the costs," said Deb Meyer, CEO of WorthyNest.com, a financial advisory firm in St. Charles, Missouri.

The purchase price of the second home must always be considered, in addition to upfront furnishings, upkeep and maintenance, and annual property taxes. Furnishings easily cost $10,000, and maintenance costs are usually higher because you need a property manager or trusted friend to check on the property in your absence, she said.

"If cash flow is tight because you own two homes and that limits you from enjoying your snowbird retirement, ask yourself if it's worth it," said Jamie Pomeroy, a Minnesota financial advisor.

"Ask yourself if life would be simpler without one of your properties. You shouldn't have to depend on one of your homes renting out to live the life you want. It comes down to cash flow, prioritizing what's important to you and simplifying life," he said.

Is the new location more favorable financially?

"Many of my clients from Minnesota and Wisconsin have become Florida or Texas residents because they are able to benefit from the states' no income tax," Pomeroy said. In many cases if you spend over six months in a state, you're considered a full-time resident, he said.

The savings on state income tax, as well as a homestead property tax exemption, were major contributing factors to the Dusolds' decision to move full-time to South Florida because it gave them more disposable income for travel, boating and golfing.

Consider becoming a landlord

To ease the cash-flow burden of maintaining two homes, consider whether you'd like to rent out your home for the months you know you won't be there on websites such as VRBO and Airbnb, which are fairly easy to navigate, Pomeroy said.

You can manage the property yourself, but if that does not appeal to you, it is also possible to hire a property manager.

This may not be a feasible option in some cases: The Dusolds had difficulty finding a suitable short-term tenant for their large, five bedroom home that offered the flexibility of coming and going when they wanted.

If you have to have two, downsize both

If the costs of owning two homes isn't inhibiting, why not just downsize them both, said Benjamin S. Offit, a CFP and partner at Clear Path Advisory in Pikesville, Maryland.

This could allow you to ease the time constraints of maintenance and management while also minimizing high real estate taxes, insurance and utility bills.

Consider the tax implications

Should you rent your home for more than two weeks over the course of the year, you would be considered a landlord for tax purposes, said David Hryck, a New York tax lawyer and partner at Reed Smith.

"Landlords will need to report the rental income but they can also deduct expenses. Since one [or possibly both] of your residences would now be considered rental properties, you can qualify for deduction such as maintenance and different repairs on the property," Smith said. "This is something you would not be eligible for on your own personal residence."

If you do not rent both homes, you can deduct mortgage interest from both your primary and secondary residences up to $1 million, and up to $100,000 on home equity loan interest, he said.

Take the emotion out

"Having two homes is less about using retirement savings productively than it is about indulging oneself, or eliminating the need to pack while having a place to enjoy and share with friends and family," Weil said. But at what cost?

Dusold said she was initially hesitant to leave her family behind full time, but eventually came to realize that her dream and well-being should come first.

"We worked hard for many years to be able to do something like this. This has been a dream of ours for many years," she said, and it ultimately swayed her decision to sell the cold-weather home. "Each couple has different motivations."