The truth about owning multiple homes? Selling a secondary property differs vastly from selling a primary residence in a variety of ways — from taxes to marketing to legal considerations (and beyond).

Whether you’re looking to sell a vacation home, list a rental property, or just striving to stay informed on the process so you’re prepared for anything, we’ve got you covered with this guide to selling a supplementary residence in your portfolio today! Here’s what you need to know:

The Capital Gains Tax Disparity

As you’re probably aware when selling your primary residence, you may qualify for a capital gains tax exemption of up to $250,000 for individuals or $500,000 for married couples filing jointly, provided you meet certain IRS requirements (like having lived in the home for 2 of the last 5 years). Secondary properties, such as vacation homes or rentals, however, typically don’t qualify for this exemption. In fact, any profit made from the sale of a secondary property may be subject to capital gains tax, which can be significant.

Meanwhile, if your secondary property is a rental, you’ve likely been depreciating the value for tax purposes, and when you sell it, you may face a tax on depreciation recapture, which requires you to pay taxes on the depreciation deductions you previously claimed.

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Selling a property soon? Explore a few related blogs from our site for more advice.

• How to Buy and Sell at the Same Time
• Should You Hire a Friend to Sell Your Home?
• How Long To Wait Before Selling My DC Home

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Target Audience Variation

When selling a primary residence, the buyer is likely a family or individual looking for a permanent home, but for a secondary property, the pool of buyers is usually smaller and more niche. What does that mean? You may need to target investors (for rental properties) or people seeking a vacation home, which requires a specialized marketing campaign and possibly a longer selling window.

Financial Preparations

One of the most crucial financial steps to take when listing a secondary residence? If the property has a mortgage, make sure the selling price will cover any remaining loan balance as well as selling costs, such as real estate agent commissions. Of course, selling a secondary property often comes with higher transaction costs since you won’t qualify for the tax exemptions that may be available for primary homes. Something else to put at the top of your to-do list? Hiring professionals to handle marketing, property staging, and possibly rental tenant relations in the event that the property is presently leased.

The Logistics

Ready to get down to business? First things first: You’ll want to ensure the property is in tip-top condition. For rental properties, this means completing any necessary repairs and potentially upgrading appliances or fixtures to make the property more appealing. If the secondary property is a vacation home, on the other hand, staging it to look inviting and primed for leisure will be paramount. With a rental property, staging might involve showcasing the home as a lucrative investment opportunity, and you’ll also want to consider the tenant’s lease in terms of how it affects the sale. For instance: Some buyers may want to keep the property as a rental, while others may want to occupy the home, requiring you to navigate tenant laws to either keep or remove renters.

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Hoping to get the best result from your sale? Read these related blogs for more helpful advice.

• 9 Small Details that Can Make or Break Your Home Sale
• 10 Real Estate Agent Red Flags To Look Out For
• Things to Know About Selling Your Home As-Is

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Marketing

Listing your vacation property? Time to spotlight its nearby attractions, amenities, and rental potential. For an investment property, you should instead focus on the residence’s rental income history, appreciation potential, and any tax benefits for investors.

At the end of the day, selling a secondary property is more complex than selling a primary residence due to nuanced tax implications, a more specialized buyer pool, and myriad legal considerations. Not sure where to start? Get in touch with us today to tap into our expertise in selling vacation homes, investment properties, and everything in between.

Buying or selling in DC? Get in touch with us directly by calling 202.280.2060 or emailing us at jsmira@jennsmira.com today!