First and foremost, a second home is NOT the same as an investment property. Good news is that you don’t pay capital GAINS on the purchase price, just the appreciation when you sell an investment property. Second home capital gains are treated differently, but if it’s been rented, it’s investment…..
One way to offset capital gains tax on investment property (one that generated rental income) is to complete a 1031 Exchange. This can be a really smart move if you intend to take the profits and reinvest them into another similar property. A 1031 Exchange differs capital gains taxes.