Vacation-home seller prepares for tax bite

Benefits lost if property isn't used as personal residence or rental

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Editor's note: Robert Bruss passed away on Sept. 26, 2007. This was one of the last real estate columns he wrote. Inman News is publishing Bob's last work as a final salute to the nation's most well-known real estate writer. DEAR BOB: How can I sell my vacation home without paying capital gains tax? --Kristie H. DEAR KRISTIE: The only easy way to avoid tax on the sale of a vacation home is to sell it at a loss. Just joking! Purchase Bob Bruss reports online. Frankly, there is no way to sell a second or vacation home without paying capital gains tax. It is clearly not eligible for the Internal Revenue Code 121 principal-residence-sale exclusion up to $250,000 (up to $500,000 for a qualified married couple) because it was not your principal residence at least 24 of the last 60 months before its sale. Of course, you could move in to make it your full-time principal residence for the next two years, thus qualifying for this exemption. Neither is your vacation home eligible...