What are the tax implications of second home sales?

Answer by  patti (29325)

The tax laws regarding the sale of a second/vacation home are determined by the IRS and change frequently. The tax implications rest on a variety of factors in any given tax year. Best to consult your tax professional for assistance.

Answer by  tamarawilhite (17883)

You do not get to shield the first 250K of profit for a single person and 500K for a married couple as you could for a primary residence. You will be taxed on the profits of the sale, but that is the difference between the sale price and what you paid for it.

Answer by  tamarawilhite (17883)

If there is a capital gain (it sold for more than you bought it for, and the mortgage is paid with money left over), then you must pay capital gains tax on that profit.

Answer by  withluck (1745)

There are tax obligations for the capital gains in the sale of a second home. You would have to have a CPA review your specific situation to know the amount.

Answer by  tamarawilhite (17883)

When you sell a second home, there is no capital gains protection as their is when you sell a primary residence. Do not sell at a loss, since it is hard to write off the loss. But selling with a low level of profit will mean a lower tax hit.

Answer by  Avw (77)

If you sell for more than you paid, you owe capital gains taxes (generally lower than the ordinary income rate) on the sale price minus your basis (cost, including expenses to buy, sell, and improve). If you do not profit, the loss could offset other income and reduce your taxes.