is there taxes to be paid when selling a second home?

Question

I own a second home and I want to sell it, but I have already bought another home. Will I be taxed when I sell my second home?

Answer 1

If the home you plan to sell was your main home for at least two of the last five years prior to the sale, and you owned it for at least two of those same five years, then its sale would likely be eligible for an exemption from taxes for up to $250,000, or $500,000 if filing joint. But if it was always your second, not your main, home, then you'd have to pay capital gains taxes on whatever the profit was.

Answer 2

Tax Facts: Interest payments on a residential mortgage, assuming the mortgage isn't larger than the purchase price of the house, are fully deductible in most cases. That's a major reason why home ownership is a terrific tax shelter. Mortgage interest on a second home is also deductible, as explained in the "Second Homes" section below. If you own a third home for personal purposes, then the mortgage interest is treated as "consumer loan" interest and is not deductible. Interest on home equity loans (see the "Equity Loans" section) is deductible, with some limitations.

Second Homes
Tax Facts: Second and vacation homes have separate tax rules, depending on the number of personal days use, by the owner. A residence is a second home if it is used personally, for more than 14 days or 10% of the days it is rented, if rented for more than 140 days. It's a vacation home if personal use is no more than 14 days or 10% of the days it is rented. For a second home, all mortgage interest and property taxes are deductible as additional itemized deductions. If there is rental income, other property expenses may be deductible, but only up to the amount of the rental income (losses are not allowed). Owners of vacation homes may claim rent expense deductions, other than interest and taxes, including depreciation of the property, even if it results in a loss. When personal use of a vacation home is involved, deductions are determined by allocating expenses, including interest and taxes, between the rental and personal use periods.

Helpful Hints: If the property is vacant for part of the year, the courts support a method of calculating the portion of interest and taxes (deductible as an itemized deduction) charged to the rent activity, that is very favorable to the taxpayer (multiply total interest and taxes by the percentage of total rented days divided by 365). See your tax advisor about this. Once you exceed the maximum personal use days described above, you'll get the largest tax deductions, by increasing your personal use days in relation to rental days.

Answer 3

I am assuming this is not a rental property.

For the house you want to sell: Was it your main home for two of the past five years? Or, was it your main home for less time, but you have to move to a new job? If so, then some or all of your gain on the sale of this home may be tax-free. If it was your main home for two of the past five years, then $250,000 of gain (or $500,000 if married) is tax-free.

If the main home exclusion does not apply to you, then you will report the gain on the sale of your home on Schedule D. Your gain will be long-term capital gain if you owned the home for more than a year. The maximum tax will be 15% of the gain.

Answer 4

We have no way of knowing how much tax they will have to pay because we don't know their personal financial situation. But, normally when property is sold, you take the cost, including land and building and deduct that from the selling cost. You can also deduct any costs incurred to sell, commissions, advertising, etc. The difference is taxable at whatever tax rate your parents pay when they file their Federal tax return.

Answer 5

If you made a profit, you will have to pay capital gains on a second home. Only gains on your primary residence are exempt from taxation up to the limit (I think it's $250,000).

Answer 6

Yes. Any profit made in the USA is taxed. Weither its your savings interest or money left from a passed away uncle, our government get a bit out of it. Sad but true.

Answer 7

No--as long as you lived in it over two years, never rented it, and did reoccupy it once you moved out. You can not write off a second home/ vacation home if it is with-in a distance from the house you live in.

Answer 8

Any time you sell property, you have to pay taxes, unless you turn around and buy property that costs more. If you buy property that costs less, you have to pay taxes on the difference.

There is a time limit on this, if you wait to long between transactions, you still have to pay the full taxes on the one you sold.

The IRS or your tax preparer can tell you the exact rules.

Answer 9

I believe you have up to 90 days to reinvest the profit, then you are taxed. BUT, you must reinvest the money, or prove reinvestment in property upgrades to have it excluded in getting taxed.

Answer 10

yes