Making the decision to sell your vacation home along the Jersey Shore can be tough. However, you would not be alone. According to the National Association of Realtors, more than 920,000 vacation homes were sold in 2015. If you are planning to sell your Jersey Shore vacation home this summer then planning ahead could save you problems later. Here are a few tips to helping the sale of your vacation home go smoothly.
The profits from the sale of your vacation home are considered capital gains. Selling a vacation home is similar to selling stocks. When you sell your primary residence the IRS gives you a break on the profits of the home up to $500,000 if you are married, and up to $250,000 for those that are single. However, with the sale of a vacation home, you are responsible for claiming the net proceeds on your taxes as capital gains. Not sure what your net proceeds are? Deduct the original purchase price of the vacation home and closing costs from the sold amount. To avoid having to pay capital gains on your vacation home it would need to be your primary residence for two to five years prior to the sale.
Always keep a list of all the home improvements you make on your vacation home and the amount you paid for those improvements. This cost can be deducted from the home’s net proceeds. By keeping good records of all your home improvement expenses it will cut down on what you owe in capital gains. However, the expense used incurred on regular maintenance does not qualify.
If you have been renting out your vacation home then you can deduct the deprecation of the home- the wear and tear your property endured that results in a lower home valuation over time. Consider taking deprecation on your vacation home annually to reduce the amount of taxes you have to pay on the rental income you receive. This lowers the basis you will have to claim when you sell the home.
If you are considering selling your vacation home along the Jersey Shore we’d be delighted to help. Our job is to make your tomorrow better than today. Contact us today via email or give us a call at 609-264-6762 for a free no obligation Comparative Market Analysis of your Jersey Shore vacation home.