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How to sell vacation home without owing profit tax

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

DEAR BOB: We have a wonderful problem and hope you can help. About 14 years ago, we bought a second or vacation home in a winter ski and summer vacation area. Our family has enjoyed many happy times there. But we are using it less and less each year. In 2004, we only used it a few weeks in the summer, plus a few winter weekends with our grown children and the grandkids (at our ages we no longer risk skiing). After talking it over, we decided selling would be prudent because the net profit will be about $375,000. However, since this is not our principal residence, our profit will be taxable as a capital gain. Is there any way to avoid tax? – Ralph R. DEAR RALPH: Yes. Your situation clearly is not eligible for the Internal Revenue Code 121 principal residence sale exemption up to $500,000 for a qualified married couple (up to $250,000 for a single homeowner). To qualify, you must have owned and occupied your principal residence at least 24 of the 60 months before sale. Unless you ...