While both a primary residence and a vacation home are types of real estate properties, there are some considerable difference between the two that can lead to differences in how you approach the sale of the two when the time comes.Even though they are both forms of real estate, they need to be treated differently within the market since the market for both can be drastically different.
Difference in Taxes
When you sell a primary residence, you are not subject to capital gains due to a principle residence tax exemption. However, if you sell a vacation home, you are going to be subject to capital gains. Any of the proceeds from the sale of a second home are considered to be profit and therefore are subject to capital gains tax. This means you will need to plan ahead to pay taxes on the sale of the property, or you will be in trouble with the CRA later.
This is because a second home or vacation home is seen as a different kind of investment to the CRA. They look at it much like the sale of stocks which means you will pay taxes on the difference in sale price from the original price that you purchased it for. When you sell a primary residence, this is not something that you need to worry about since it is not considered an investment by the CRA.
The Best Time to Sell
There may be two different peak markets for each home when it comes time to sell. For a primary home, the best time to sell is usually in the summer between the end and start of the new school year. However, you can still sell your primary home outside of this window, it just tends to be the most active time for most areas. The best time to sell a vacation home is during the peak season for the areas. If a vacation home is by the beach, then aim for the summer. If it is in the mountains of a ski area, you should try to sell your home during ski season.
Selling outside of these windows, while possible, is not very common because a lot of people do not have their mind on vacations at the beach during the winter or skiing in the summer. You will also get more for the property when you sell in peak time. Make sure you keep this in mind when you are looking to sell your vacation property so you can have success faster and the property will not sit on the market for too long.
Get the Right Real Estate Agent
Getting a real estate agent for your primary home can be easy. You simply need to find one that you can trust and that has experience. However, finding one for your vacation home can be a bit more tricky. You need to find one that has experience selling vacation homes because it is a different market with a different approach, whether it's in Tuscany or elsewhere. The key is to find someone that understands not only the vacation market for the area but the best time to list as well as information about other vacation homes in the area. This is different than a regular agent and you want to use one that can help you have the most success.
Selling your primary residence and vacation home is a lot easier said than done but if you understand the differences, you can better understand what you need.