5 Tips for Selling a Vacation Home

Owning a vacation home in an area with opportunities for relaxation and recreational fun is a dream come true for a growing number of people in the United States today. In fact, recent statistics provided by the National Association of Realtors® (NAR) show that approximately 1.3 million vacation properties were sold in 2014, a 57% increase over the previous year.

In some cases, however, life changes occur that make owning a second home unnecessary or even unaffordable. When this happens, owners often find that selling their vacation home is sometimes a more challenging process than selling a home used as a permanent residence. If a vacation home is no longer a good fit for your life or your finances, the following tips will offer insight to help overcome these challenges for an easier and more successful selling experience. 

Understand the Tax Implications Before Selling

Because a secondary residence or vacation home does not enjoy the same preferential treatment by the Internal Revenue Service (IRS) as a primary residence, proceeds from the sale of these properties will typically be counted as capital gains. Primary home sales enjoy an exemption from this type of taxation in the amount of $250,000 for single owners or $500,000 for a married couple that is not available on a vacation home. This means that when selling vacation homes, the proceeds of the sale minus the purchase price paid for it, plus closing costs, will often be taxed as capital gains. 

If the seller has made improvements in the home, however, such as adding a room, the cost of these improvements, like the closing costs and the original cost of the home, can also be used to reduce the cost basis and lessen the amount of the actual capital gains tax that will be due. Owners must remember, however, that normal maintenance costs are typically not deductible in relation to capital gains. Additionally, all improvement costs used in this manner must be verifiable and properly documented through receipts or other documentation approved by the IRS. 

Widen the Net to Capture More Buyer Attention

Vacation home owners who want or need to sell their home as quickly as possible should look for ways in which to increase the pool of prospective vacation home buyers who might be interested in their home.

To do this, owners should consider targeting both vacation home buyers and other groups, such as:  

• incoming retirees to the area who are looking for a permanent residence
• local homeowners who are selling their home to downsize
• investors seeking homes to use for temporary or seasonal vacation rentals 

By considering market segments like these, vacation home owners can significantly increase the number of potential buyer prospects for their home and help to speed up their sale process. 

Take Advantage of Timing

Timing is an important factor when selling a vacation home, especially if the local area is impacted heavily by changing seasons, such as a home on the beach or one that offers winter skiing opportunities.

Vacation homes in areas where seasonal tourism is a major factor will receive the most favorable attention by making sure they are listed and actively marketed during these seasons. Optimizing marketing during these seasonal peaks might include paying for radio advertising, making brochures and fliers available at area restaurants, inns, and hotels, and hosting open houses. 

Use Technology to Improve Marketing

Reaching the right audience is as important as reaching a wide audience when marketing vacation homes and newer technology can help owners reach the right audience more effectively. Using services such as Google Adwords allows vacation home owners to specifically target web display ads to segments of the population most likely to consider the purchase of a vacation home.

Statistics show that these segments include those with an income of $90,000 or more and those who live in major metropolitan areas, such as Seattle where incomes are rising and the purchase of a second home or vacation property growing in popularity.  

Work With an Experienced Agent

The single most important tip for successfully selling a vacation home is to take advantage of the networking abilities and marketing skills offered by the right real estate professional. An agent who has a successful track record in marketing and selling vacation homes like yours will be better positioned to effectively maximize buyer traffic to your home and help you secure the best possible purchase offer in the least amount of time.