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Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 3364
Experience:  18+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
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Re: Purchase and potential resale of vacation home property

Customer Question

Re: Purchase and potential resale of vacation home property
Married 72 year old purchased vacation property as a second home in 2014.
Intention was to live in home during cold weather in North and beyond. Taxpayer lived in vacation home during 2015 for more than six months. Vacation home has never been rented so use has been to date 100% personal.
Taxpayer has encountered unforeseen financial situation that may require that vacation home be sold..but at least one year after purchase date.
If home is sold at a profit after one year, is profit eligible for capital gains tax?
What, if any, are relevant tax issues relating to this illustration that may impact taxpayer?
What is your advice to taxpayer regarding situation where vacation property was intended to be used for years as a second home but unforeseen circumstances (including
health issues) may require taxpayer to raise cash (there is no mortgage on property)?
Thank you.
Submitted: 1 year ago.
Category: Tax
Expert:  Barbara replied 1 year ago.

Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

Based on the information contained in your question, the sale of this vacation/second home would be subject to capital gains tax on the adjusted basis (what the owner paid) plus an improvements and the selling price less closing costs, real estate commission, etc.

Unfortunately, the sale of the vacation/second home would not qualify for the sale of home exclusion ($500,000 if MFJ) as it is not the principal residence.

The following link contains great information which you will find helpful:

Please let me know if you require further information or clarification.

Thank you and best regards,


Expert:  Barbara replied 1 year ago.

Just following up with you to see if you have any other questions. If so, please come back to me here at your convenience, and I will be happy to assist you. If not, please take a moment to rate my answer since that is the only way I receive credit for answering you and alerts JustAnswer to compensate me for a portion of the fee you have previously paid.

Best regards,