Second Home Investment

Before the changes in the rules of capital gains, many people did not
purchase a second home until they had sold their primary home. That
was the rule of the day. That's the way they could roll over any gain and
avoid a high tax bill. The changes in capital gain taxes now allow couples
to pocket a $500,000 gain (For singles, it is just the half - $250,000) on
that primary home.

If you want a place to vacation in now and move to later, try to locate a
well-populated area with good healthcare facilities and a job market and
also a good school district. You may not need the last criteria for your
retired life but a good school district is always associated with greater
appreciation of your home value.. Also, if you choose an income-tax free
state, that can put about 10% of your income back to your pocket after
you move.

Last tip: If you live in your second home at least 2 of the last 5 years, you
will again be able to get the same capital gain tax break if you wish to sell.
These 2 years need not be consecutive. For example, you could live in
your house for a year, rent it for two, move back in for another year and
rent it again the year before you sell and qualify for the tax break.