Sale of second home is subject to capital gains tax

Need help with your taxes? USATODAY.com will publish a reader's question and the answer from a member of the American Institute of Certified Public Accountants (AICPA) every weekday until April 15. Today's question:

Q: I have a second house that I plan to sell. I will have owned this home for more than 12 months, which should qualify it for the 15% capital gains tax. I also have stock that I can sell with a long-term capital loss. Can I apply the long-term capital loss for my stock against the long-term capital gain for my second home?

Answer from AICPA member Norman S. Solomon:A second home, not used for business, is a capital asset in the hands of the owner.

If that property is held for more than one year and is sold at a gain, such gain will be taxed as long-term capital gain subject to a maximum federal tax rate of 15% (although a 0% rate exists for certain low income taxpayers in 2008, 2009 and 2010).

A capital gain may be offset on a dollar-for-dollar basis by deductible capital losses.

Therefore, capital losses from stock sales may offset the gain from the sale of the second home.

Furthermore, losses of up to $3,000 (on a joint return) in excess of the reported capital gain may be deducted against ordinary income. (There may be different rules for state tax reporting purposes.)

For more information:

IRS Publication 523: Selling Your Home (pdf)

Send us your question. One selected question and answer will be published each weekday at money.usatoday.com through April 15. E-mail us at taxes@usatoday.com. Include your e-mail address and daytime phone number. Our accountants can provide general information and advice about tax issues. They will not know your entire tax situation, so go to your own tax preparer for detailed advice.

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