A vacation home is one of the greatest things to have. Aside from having a place to live in during summer breaks, owning a vacation home may also serve as a source of passive income when you rent it out to other people. While there are a lot of benefits to owning one, a lot of people are already selling their vacation homes. Should you also sell yours?
As previously reported here on Realty Today, other real estate agents would encourage you to make a vacation home as your first ever real estate purchase. A vacation home can be counted as a real estate investment in such a way that you would earn passive income by renting the property to other people through rental sites such as Airbnb.
However, it looks like a lot of people are already letting go of their vacation homes. In the 2016 Investment and Vacation Home Buyers Survey conducted by the National Association of Realtors, it was revealed that 920,000 vacation homes were sold in 2015, reports Realtor.com.
This was the second highest number since 2006, which can be quite surprising given the increase in the demand for rental homes in the market. The publication noted, however, that there are a lot of things that you need to know and prepare for before selling your vacation home.
According to the publication, selling a vacation home is different from selling your primary residence. For instance, there is no such thing as a tax break when you sell a vacation home.
In 2015, the capital gains tax was at 15 percent for most taxpayers and higher than that for those with higher income tax bracket. This means that if you sold your $200,000 home for $300,000, the capital gains tax would apply to the difference between the base and selling price as well as the closing costs and home improvement costs spent on the house.
