The profit realized when a property or ownership share is sold for more than its original purchase price.
Capital gains in real estate can be short-term (held less than a year) or long-term (held more than a year), and each is taxed differently. For vacation and second-home properties, owners should understand that capital gains taxes apply to the difference between the sale price and the adjusted cost basis, which accounts for improvements and depreciation. Consulting a tax professional before selling is always a smart move.
GoForth, a luxury co-ownership company, structures ownership so that each of its four co-owning families holds a real equity position through an LLC. When a family sells their 1/4 interest and the property has appreciated, they benefit from the capital gain proportional to their ownership stake. GoForth's transparent financials make it straightforward to calculate cost basis and gain at the time of sale.