Vacation Property Walkthrough: Selling A Vacation Property
AAA
  1. Vacation Property Walkthrough: Introduction
  2. Vacation Property Walkthrough: Reasons To Purchase Vacation Property
  3. Vacation Property Walkthrough: Considerations When Choosing A Vacation Property
  4. Vacation Property Walkthrough: Timeshares And Fractional Ownership
  5. Vacation Property Walkthrough: Financing A Vacation Property
  6. Vacation Property Walkthrough: International Vacation Properties
  7. Vacation Property Walkthrough: Maintaining A Vacation Home
  8. Vacation Property Walkthrough: Renting Out A Vacation Home
  9. Vacation Property Walkthrough: Selling A Vacation Property
  10. Vacation Property Walkthrough: Conclusion

Vacation Property Walkthrough: Selling A Vacation Property

Planning ahead and good record keeping can help owners limit potentially costly errors when it comes time to sell a vacation property. Capital Gains
To claim the capital gains exemption, an owner would have to make the vacation property a primary residence for at least two years. If the home is not converted into a primary residence for at least two years, the owner will owe tax on any profit from the sale. If the property was owned for more than 18 months, the profit is considered a long-term capital gain (prior to that it is a short-term gain). Certain expenses can be added to the owner's cost basis when determining capital gains; record keeping and tracking all of the expenses associated with the property is vital.

1031 Exchanges
A 1031 exchange, also known as a like-kind exchange or tax-deferred exchange, is a transaction where a seller swaps a rental or investment property for another rental or investment property of equal or greater value, on a tax-deferred basis. The advantage is that the seller may be able to avoid paying capital gains tax on the exchange. A property must be considered a rental property (and not a personal residence) to qualify for a 1031 exchange. This means that the owner must rent out the property for 15 days or more and use it for less than 14 days or 10% of days the home was rented.

Rental Potential
If the home has been used as a rental, a solid rental history can significantly boost the home's value and marketability. Again, keeping accurate records is an important part of vacation-home ownership. Many areas are flooded with vacation properties. The homes may be comparable and offer similar amenities, but one with a strong rental history will likely sell for more money.

Vacation Property Walkthrough: Conclusion

  1. Vacation Property Walkthrough: Introduction
  2. Vacation Property Walkthrough: Reasons To Purchase Vacation Property
  3. Vacation Property Walkthrough: Considerations When Choosing A Vacation Property
  4. Vacation Property Walkthrough: Timeshares And Fractional Ownership
  5. Vacation Property Walkthrough: Financing A Vacation Property
  6. Vacation Property Walkthrough: International Vacation Properties
  7. Vacation Property Walkthrough: Maintaining A Vacation Home
  8. Vacation Property Walkthrough: Renting Out A Vacation Home
  9. Vacation Property Walkthrough: Selling A Vacation Property
  10. Vacation Property Walkthrough: Conclusion
RELATED TERMS
  1. SENTRI

    This U.S. program grants pre-approved travelers access to a faster ...
  2. Boat Owners' Insurance

    An insurance policy that provides coverage for individuals who ...
  3. All-In Coverage

    A type of insurance coverage that applies to communally used ...
  4. Single Entity Coverage

    A type of insurance policy that covers all real property in a ...
  5. Bare Walls Coverage

    A type of insurance coverage that applies to communally used ...
  6. Commercial Real Estate Loan

    definition of a commercial real estate loan
  1. Why does time value of money (TVM) assume that a dollar today is worth more than ...

    Learn about time value of money, or TVM, and how a present value calculator is used to determine the value of money received ...
  2. What is the difference between a balance sheet and a cash flow statement?

    Understand the difference between a balance sheet and an income statement. Learn the three components of each of the financial ...
  3. What are some ways to increase your disposable income?

    Learn what disposable income is and how you can increase your disposable income by working a second job, starting a small ...
  4. What are the four types of economic utility?

    Understand the four main types of economic utility that apply to transactions between consumers and businesses: form, time, ...

You May Also Like

Related Tutorials
  1. Budgeting

    The Complete Guide To Planning A Yearly Budget

  2. Budgeting

    The Complete Guide To Retirement Planning For 40-Somethings

  3. Taxes

    The Complete Guide To Retirement Planning For 30-Somethings

  4. Home & Auto

    Homebuyers' Walkthrough

  5. Home & Auto

    The Complete Guide To Real Estate Renting

Trading Center