Perhaps you’re not using your vacation home as much as you used to. Or, your children have all grown. Or, you have your eyes set on new investment. Whatever the reason—you’ve now decided to put your vacation rental on the market.
Before you lock the front doors and put up that ‘For Sale’ sign, here are five tips to help you avoid losing money and paying a hefty tax bill.
Even if you’re confident you want out, it’s wise to hire an accountant before you put the house on the market. It’s vital to understand all the financial outcomes. For instance, if you want to invest in another property, you may discover (too late) that it was best to stick with your original property once you factor in closing costs and current interest rates.
Vacation rental properties are a special breed of real estate. Agents well-versed in these short-term rentals will understand that you’re not just selling a home, but a business. And, they’ll know how to position your property to investors looking for both the best cap rate and curb appeal. The Vacasa Real Estate team is one such trusted resource. Here’s what they can offer:
While there’s no magic time to put your vacation home on the market, some months may be better than others—based on your destination. You could consider listing right before your high season. Some benefits:
If the buyer needs to invest in improvements or repairs before they can host guests, you might want to sell well ahead of your busiest time of the year. This will give the buyer time to get the property in tip-top shape to maximize the high season.
On the other hand, if your timeline to sell is years out, consider selling before expensive, big-ticket repairs and replacements are due—such as replacing roofs, flooring, or windows.
Many vacation rental buyers are real estate investors looking for a cash-flowing asset, not just a second home for personal vacations. So, come prepared with evidence that your home can turn a profit. Some paperwork and facts to collect ahead of time:
Also, do you have any unique features that aren't currently being used, such as a granny flat or a basement with a private entrance? Make sure buyers know there is potential for even more rental income.
Deals can fall apart. Potential buyers can disappear. Financing can fall through. Even if you believe your vacation rental will sell quickly, keep rental income flowing and your guests happy. One of the appeals of investing in a vacation rental is that it comes with turnkey business assets and systems that make money—from your listings on vacation rental sites to your cleaning procedures after guests check out.
Here are two ways to continue booking guests, while making it available to view for prospective buyers:
There’s a lot to navigate when selling your vacation rental without losing money. From getting the right details in order to listing at just the right time—these tips can help you maximize your earnings while your vacation home is on the market.
A common way to defer paying the taxes on your capital gains—meaning, your profit—when selling your vacation home is to complete a 1031 exchange. This allows you to sell one investment property, then purchase another “like-kind” property without having to pay capital gains tax. There’s no limit on how frequently you can do a 1031 exchange. These taxes can be deferred indefinitely. The capital gains keep rolling from one investment property to another, just as long as you don’t sell any of those investment properties for cash.
One way to lower your vacation rental tax bill is to maximize your deductions. There are many expenses you may be able to write off. Some common tax deductible expenses can include appliances, furniture, maintenance and repairs, and even utility bills.
Call 844-518-0967 to speak with a Homeowner Consultant, who can answer preliminary questions and see if we’d be a good fit for you.
If you'd like to move forward, we’ll put you in touch with our market expert in your neighborhood to explore the financial potential of your home, outline our management fee, and introduce your local team.
Vacasa offers property management and other real estate services directly through Vacasa LLC and through Vacasa LLC's licensed subsidiaries. Click here for more information about Vacasa's licensed real estate brokerage/property manager in your state. Vacasa’s licensed real estate brokerages/property managers include: Vacasa Alabama LLC; Vacasa Arizona LLC; Vacasa Colorado LLC (Micah Victory); Vacasa Delaware LLC, 302-541-8999; Vacasa Florida LLC; Vacasa Louisiana LLC, Dana MacCord, Principal Broker, ph 504.252.0155 (Licensed in LA); Vacasa Michigan LLC, 947-800-5979; Vacasa Missouri LLC, Susan Scanlon, Designated Broker; Vacasa Nevada LLC; Vacasa New Hampshire LLC, P.O. Box 283, Conway NH 03818, Dave Grant, Broker of Record; Vacasa New Mexico LLC, 503-345-9399; Vacasa New York LLC, 888-433-0068, Susan E. Scanlon, Real Estate Broker; Vacasa North Carolina LLC; Vacasa Pennsylvania LLC; Vacasa Real Estate Corporation, California DRE #02105811, Joseph Czapkowicz, California DRE #01380722; Vacation Palm Springs Real Estate, Inc., California DRE #01523013, Joseph Czapkowicz, California DRE #01380722; Vacasa Real Estate LLC (licensed in Colorado, Daned Kirkham); Vacasa Real Estate LLC (licensed in Idaho, Oregon, and Utah); Vacasa Real Estate LLC (licensed in Maine, Michael McNaboe, Designated Broker); Vacasa Real Estate LLC (licensed in Texas, Debra Brock, Designated Broker); Vacasa Real Estate LLC (licensed in Washington, Robert Brush, Designated Broker); Vacasa Seasonals Inc., California DRE #02160171, Lisa Renee Stevens, California DRE #01485234; Vacasa South Carolina LLC; Vacasa South Dakota LLC; Vacasa Tennessee LLC; Vacasa Vacation Rentals of Hawaii LLC, 3350 Lower Honoapiilani Road, Suite 600, Lahaina, HI 96761; Vacasa Vacation Rentals of Montana LLC, Terah M Young, Licensed Property Manager; Vacasa Virginia LLC; Vacasa Wisconsin LLC; Vacasa Wyoming LLC. In Canada, this advertisement is provided by Vacasa Canada ULC, CPBC lic. number 75826, 172 Asher Rd. V1X 3H6 Kelowna, BC.