So looking to retire in Northern Wisconsin where we have a lake house. Want to sell that and our main home in suburban Milwaukee and buy a different house on the same lake up north.
How to best limit taxes.
Vacation home
Current value: ~$500,000
Mortgage: $0
Primary residence
Current value: ~$650,000
Mortgage balance: ~$150,000
Paid $218,000 in 2001
Goal:
Sell both.
Purchase one new home as your permanent residence.
Selling main house and vacation house for 1 different retirement house. Tax help?
byu/SilencedFarter intax
Posted by SilencedFarter
2 Comments
Purchasing another home does not affect the taxes on either sale. The mortgage balance does not affect the taxes on either sale.
If you are married and have owned and lived in the main home for over 2 years, as your primary residence, then there is no taxable gain on this sale.
You would pay capital gains tax on the taxable portion of the gains on the vacation home sale.
Since these are personal homes, you won’t be able to do a like-kind exchange. But the good news is that for your personal residence, you do have a nice exclusion of $250K (single) and $500K for married, assuming you’ve lived there for more than 2 years. To figure out what your gain is on the vacation home, we would need to know what you purchased it for and what you think you will sell it for and whatever renovations you’ve done with it.