[billhilly]

Here is my situation and I hope it will be useful to you as you contemplate what to do. I live in Northern Virginia and also have a house in Kill Devil Hills, North Carolina. The house in NC is rented and has been for several years. In order to get the full tax advantage of the second home, we will have to live in the rental house for at least two years, then there will be no capital gains tax. Living at the beach (The Outer Bankis) will not be hard to take, but we will have to sell here to realize the tax relief. Fortunately, we are older and could move most anytime.

New Jersey has a lot of seashore and you may want to retire there one day. It is a smart move since seashore rentals are practically guaranteed to pay your mortage.

[billhilly]

It will pay your mortgage also.

[Alberta's Child]

OK. Thanks for the info. The property in question for me is a small office building, so none of the laws governing the capital gains tax on a first home would apply. I assume that you are doing all of this on your personal tax return and not as a corporation, right?