Owning a second home is a growing trend. From January to April of 2021, U.S. vacation home sales were 57.2% higher than sales over the same period in 2020, according to the National Association of Realtors. That spike far outpaced the 20% rise in total existing home sales.

If your plans for retirement living include frequent visits to a favorite vacation spot, then you may be considering buying a second home. But before you start house hunting, take a look at the pros and cons of owning two homes in retirement.

Pros of Owning Two Homes

Convenient Getaway

With your own vacation home, you'll always have a place to retreat to when you want a change of pace or scenery. You won't have to deal with booking lodging, and you'll have room for family and friends to join you if you so desire. You'll have a place to store household items, recreational equipment and other things you'd ordinarily have to lug back and forth if you were renting a place to stay.

Income Potential and Tax Perks

A second home also offers the potential to earn extra retirement income by renting out the dwelling when you're not using it. If you rent out the home for more than 14 days a year, you can also deduct expenses like utilities, maintenance and home improvements on your federal income tax return. These deductions are not available for personal vacation homes rented out for 14 days or less.

There are other tax benefits, too. You can deduct a portion of the mortgage interest on a second personal residence on your federal return. State and local property taxes are generally deductible as well, with certain limitations.

Cons of Owning Two Homes

More Expensive to Purchase

You'll pay slightly higher than general market interest rates when you buy a second home because mortgage lenders view them as riskier than primary residences, as the Mortgage Reports blog notes. Lenders figure that if your funds get tight, you're more likely to let payments lapse on a vacation home. Lenders will also usually require a downpayment of at least 10% on a second home.

Additional Expenses

Besides the higher costs involved in purchasing a second home, you'll of course also need to purchase more homeowners insurance. If you're treating the home as an investment property that you rent out more than two weeks a year, add landlord's insurance to the list of expenses.

Another thing to keep in mind is that if you pay $10,000 or more in property taxes on your first home, you likely won't be able to deduct any of the property taxes from your second home. You'll also owe taxes on any rental income you receive from the property. Furthermore, unlike with a primary residence, you won't be eligible for any capital gains exclusion on the income taxes you pay if you sell it.

Maintenance Costs

Maintaining two homes could mean a significant investment in time and money, including traveling back and forth to check on its condition and make repairs or hiring a property manager and home improvement contractors if you don't want to do those jobs yourself.

Other costs to consider include home security, utilities and any applicable condo or homeowner association fees.

Should You Buy a Second Home in Retirement?

Once you've weighed the pros and cons of owning two homes, the choice comes down to whether you can afford it, whether it works for the way you want to spend your time and the lifestyle you want to have, and whether the benefits — personal, financial or both — outweigh the costs.

Estimate the cost of everything involved in purchasing, owning and maintaining a second home, then figure out your projected annual budget, including any income from renting out the property part of the year. While rental income can offset the cost of owning a second home, be sure to consider if you'll still be able to afford the costs if renters don't come.

It's also a good idea to talk to a retirement planner or other financial advisor, as well as friends and family members who own second homes, about the pros and cons of owning two homes. Their expertise and experience can help you decide if buying a second home makes sense for your retirement goals, finances and lifestyle.