Selling a Vacation Home? Here’s What You Need to Know About Selling a Vacation Property
Do you own a vacation home that you’re thinking about selling? Maybe you’re tired of the location and want to vacation in other destinations. Or perhaps the home values have gone way up from what you paid, and you want to sell your vacation home and buy another. No matter your reasons for selling your vacation property, here are some of the important things you need to know before selling a vacation house.
How to Sell a Vacation Home
One of the biggest challenges about selling a vacation property is typically the fact that you don’t live there full-time. This can make getting the house ready to sell more difficult. Plus, you might not know the market very well or be up to date on changes in that city’s real estate market, so pricing accurately can be a concern. Here’s a short guide with tips on how to sell your vacation property!
Preparing to Sell Your Vacation Home
1) Interview local real estate agents
2) Determine the fair market value of your house
3) Figure out the things you need to repair
4) Determine how you can increase your home’s value
5) Consider the tax implications (scroll) for selling your vacation home
6) Get house clean and ready for showings
7) Agree on listing price and put home on the market
What’s the Easiest Way to Sell a Vacation Home When You Don’t Live There?
Obviously, most people don’t live in the same city as their vacation property. Otherwise, would it really be a ‘vacation’ home? The fact that you could be located hundreds or thousands of miles away can complicate the selling of your home. But with modern technology, selling a home can be done easily from anywhere in the world.
The easiest way to sell your vacation home or condo when you don’t live there is to work with a local real estate agent. Yes, you’ll have to pay a commission fee for the successful sale of your home; but having representation and the expertise of a local real estate expert can be well worth it.
For example, when selling a vacation home in Las Vegas we recommend you work with a local real estate agent who knows the market and how to price your home properly. Things change and real estate markets move fast. Trying to sell your vacation home by yourself when you don’t live in that market is a recipe for mistakes and headaches.
Selling a Vacation Home and Buying Another
In the case that you want to sell your vacation house and buy another at the same time, you’ll want to have the help of a real estate agent or team who can list your house and handle the sale of it, while helping you find another property at the same time.
It’s a good idea to have your financing in order as well, which a mortgage professional can help with. Then, it often comes down to the timing of the sale and escrow of the house you’re selling, and contingencies negotiated on the home you’re buying, in order to sell and buy at the same time.
What are the Tax Consequences of Selling a Vacation Home?
One of the final things you should consider before you sell a vacation property are taxes. While not many like to pay them, it’s a fact of life that certain financial transactions are taxed by the government. Here are a few commonly asked questions about taxes when selling a vacation home.
Do I Pay Taxes on the Sale of a Vacation Home?
The answer is yes, you will likely pay taxes when selling your vacation property. Unless you qualify for the primary home sale exclusion, which states you had to have lived in the home as your primary residence for at least two out of the past five years – and complied with other IRS rules – you will pay capital gains tax when selling your vacation house.
Capital Gains on the Sale of a Vacation Home
Since your vacation home is typically a second home that you haven’t lived in full time, the IRS considers it a “personal capital asset”, which makes selling a vacation house similar to selling stocks and subject to capital gains tax.
Depending on your income and whether or not you’ve owned the home for more or less than one year, your capital gains tax when selling a vacation property could range from 0% - 20%. Be sure to check with the IRS, as tax rates and policies are subject to change.
How Can I Avoid Capital Gains Tax when Selling a Vacation Home?
To avoid paying capital gains taxes when selling a vacation home, you might consider not selling, using the property as your primary residence, renting out the property or using a 1031 exchange.
In Closing: Selling a Vacation Property
Ultimately, the decision is up to you on whether or not you’ll sell your vacation home. Take time to consider your options such as if you still want to vacation in that location and where else you would rather own a vacation home. And don’t forget about the factors of selling a vacation property including the local real estate market and tax implications.
You can take stress away when selling a vacation home by working with a local real estate agent. And just remember, it was a home or condo you used for vacations, and vacation is supposed to be fun. Don’t stress out and instead, look forward to your next vacation house!
Disclaimer: This article is for general informational purposes only and should not be considered as financial, tax, accounting, real estate or legal advice or a legal opinion on specific facts or circumstances, nor a solicitation of tax, accounting or legal business. You are urged to consult an experienced CPA or attorney concerning your particular actual situation and any specific financial, tax or legal questions you may have. No client relationship is formed as a result of any exchange of information.