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| HOW WILL I BE TAXED WHEN THE FRACTIONAL VACATION HOME IS SOLD OR I SELL MY SHARE? |
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© March 16, 2007 by D. Andrew Sirkin.
Any reproduction or use of this document or any part of its content
requires the written consent of the author. Mr. Sirkin is chief attorney for Paris Pied-à-Terre Fractional Ownership. Contact Mr. Sirkin at
dasirkin@earthlink.net, or visit www.andysirkin.com
Unless you have occupied the property as your primary residence for two of the five years immediately preceding the sale, you will not qualify for the $250,000 singele/$500,000 married exclusion from capital gains tax. But you are likely to qualify to have any profit taxed at the lower long-term capital gains rates, and you may qualify to complete a tax-deferred exchange. In general, the tax treatment of your profit or loss on resale will depend upon how the property was used in the 12 months preceding the sale. If you are contemplating a sale of a vacation property (or just your share of one), it is wise to consult a tax expert at least a year before the planned sale.
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