Question: We have owned a vacation home in Sierra Vista for 15 years. We would like to sell this Sierra Vista home, but we do not want to pay any taxes. Will we have to pay any taxes if we sell our vacation home?
Answer: Probably. Although there is a $250,000 single-person exemption/$500,000 married exemption for any gain on the sale of a principal residence, there is no exemption for the gain on the sale of a vacation home. Therefore, when you sell your vacation home, you should have to pay tax on the gain.
Note: If you rented out your vacation home when you were not staying there, your vacation home could be an investment property. You then could be eligible for a Section 1031 tax-deferred exchange if you wanted to purchase a new vacation home. Please consult your tax adviser.