Tax Flubs Vacation-Home Owners Make When Selling Their Houses

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Tax Flubs Vacation-Home Owners
Make When Selling Their Houses

By Lauren Baier Kim

The housing boom has been kind to many owners of second-home properties. Consider that popular destinations such as Arizona's Phoenix-Mesa-Scottsdale-area saw median selling prices for existing single-family homes appreciate by 48.9% in the fourth quarter of 2005 from a year earlier, according to the National Association of Realtors. That means, for example, if a homeowner purchased a golf-course property in Scottsdale for $500,000 in 2004 and sold it a year later, he or she may have walked away with a profit (before taxes) that exceeds $200,000. With such gains, it's no wonder that some homeowners approach selling their vacation residences with trepidation, given the possibility of a big hit come tax time.
-- March 14, 2006

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