Vacation home sales
My wife and I have owned a condo vacation house in Wisconsin for 32 years. We have never rented it. What would the tax consequences be if we sold it? Is there any way to avoid the taxes? We have a son that is interested in keeping the property. Could he be used as a solution to avoiding the taxes?
Terry Says
If you sell it, you will owe long-term capital gains taxes on the appreciation. That’s the current value, minus the original cost — but the cost basis will be increased by any improvements you made to the property.
If your son inherits it at your death, under current tax law, there is a “step-up” basis — which means that his new cost basis will be its value on the date of death. There would be no tax.
So how about leaving the property to him in your estate plan (will or revocable living trust) — and make him responsible for paying the condo fees from now on (assuming he is the one using it).
