Selling a second home in New Hampshire differs from selling the house you live in on four fronts, and each one has a dollar figure attached: the federal Section 121 capital gains exclusion does not apply, so the full gain is potentially taxable; the buyer pool mostly lives out of state; the diligence is heavier (septic, shoreland rules, dock rights); and the calendar is different — a lake house and a ski condo want to be listed in different seasons. New Hampshire itself is kind to sellers on taxes — no state tax on the gain, just the RSA 78-B transfer tax — but the federal side and the paperwork are where second-home sellers get surprised.
Our team lists and sells lake houses, ski condos, and mountain second homes across the Lakes Region, Waterville Valley, and the White Mountains from our offices on Route 49 in Campton and on Main Street in Plymouth — and we also operate vacation rentals in these towns ourselves, so we know these properties from the owner's side of the ledger, not just the listing side. This guide covers what we walk every second-home seller through, including a timely word about the second-home tax surcharge that's been in the New Hampshire news this year. One note before the details: we're your brokerage, not your tax advisor. The tax rules below are accurate as we write this, but they change, and how they apply depends on your facts — confirm the specifics with your CPA and closing attorney before you act on them. If you want to start with the simplest number — what the property would sell for today — request a free professional valuation and we'll build it from real waterfront and resort comps.
In this guide:
- Why the tax picture is different
- The 2026 second-home surcharge debate
- Timing: lake houses and ski condos run on different calendars
- Septic, shoreland, docks, and access
- Marketing to out-of-state buyers
- If it earned rental income
- The pre-listing document checklist
- Frequently asked questions
Key takeaways:
- Second homes get no Section 121 exclusion — the full federal gain is taxed at long-term capital gains rates of 0/15/20%, plus a possible 3.8% net investment income tax for higher earners.
- New Hampshire takes no income tax on the gain; the seller's transfer tax under RSA 78-B is $0.75 per $100 of price — about $4,013 on a $535,000 sale.
- Past rental use adds depreciation recapture taxed at up to 25%, and genuinely investment-held properties may qualify for a 1031 exchange if it's structured before the sale.
- The second-home surcharge in the January 2026 headlines is a legislative proposal, not law.
- Waterfront buyers scrutinize septic (a site assessment is required under RSA 485-A for developed waterfront), RSA 483-B shoreland compliance, and dock permits — assemble the documents before you list.
Why selling a second home in New Hampshire is different: the tax picture
The good news first: New Hampshire has no state income tax on wages or capital gains, and the state's Interest & Dividends tax was fully repealed effective January 1, 2025. When you sell a second home here, the state of New Hampshire takes no bite of your gain. Your state-level cost is essentially the real estate transfer tax under RSA 78-B — $0.75 per $100 of the sale price on the seller's side, with the buyer paying a matching share (a $20 minimum applies to each side on nominal transfers). The arithmetic is simple: $535,000 ÷ 100 × $0.75 = $4,012.50 — call it $4,013 — and $850,000 ÷ 100 × $0.75 = $6,375.
The federal picture is where second homes diverge sharply from primary residences. The Section 121 exclusion — the rule in the Internal Revenue Code that lets a married couple filing jointly exclude up to $500,000 of gain ($250,000 single) on a home they've owned and lived in for two of the last five years — does not apply to a second home. Every dollar of gain on a vacation property is potentially taxable at federal long-term capital gains rates of 0%, 15%, or 20% depending on your income, plus a possible 3.8% net investment income tax (NIIT) for higher earners.
Which taxes apply to which kind of home
| Tax or rule | Primary residence | Second home (personal use) | Rental / investment property |
|---|---|---|---|
| NH tax on the gain | None | None | None |
| Section 121 exclusion ($250k/$500k) | Yes, if owned and occupied 2 of the last 5 years | No | No |
| Federal long-term capital gains (0/15/20%) | Only on gain above the exclusion | On the full gain | On the full gain |
| Net investment income tax (3.8%) | Possible on gain above the exclusion, high earners | Possible for high earners | Possible for high earners |
| Depreciation recapture (up to 25%) | No | Only if it spent time as a rental | Yes |
| 1031 exchange deferral | No | Generally no | Yes, if structured before the sale |
| NH transfer tax, seller share (RSA 78-B, $0.75/$100) | Yes | Yes | Yes |
A worked example
Say you bought a Lakes Region cottage in 2012 for $450,000, put $75,000 of documented capital improvements into it over the years — a new septic system, a rebuilt deck, a renovated kitchen — and sell in 2026 for $850,000. Your adjusted basis (purchase price plus capital improvements) is $525,000, so your gain is $325,000 before selling costs — and selling costs, including your $6,375 transfer-tax share and any commission, reduce the taxable gain further. If this were your primary residence, a married couple would owe nothing. Because it's a second home, the remaining gain is a taxable long-term gain — at the 15% bracket most sellers land in, roughly $48,750 in federal tax on $325,000, before any NIIT and before selling-cost adjustments. Numbers are illustrative; your bracket, selling costs, and improvement records all move the result, which is why the paperwork matters. Two practical lessons: keep every receipt for capital improvements (they raise your basis dollar for dollar), and get a tax projection before you list, not after you close. Our guide to capital gains tax when selling a home in New Hampshire goes deeper on the mechanics.
If you rented it out: depreciation recapture
If the property spent time as a rental — a full-time tenant or a short-term rental operation — there's a second layer. The depreciation you claimed (or were entitled to claim) while renting reduces your basis, and on sale that amount is "recaptured" and taxed at a rate of up to 25%, separate from the capital gains rate on the rest of your gain. To put a scale on it: $60,000 of depreciation claimed over eight rental years means up to $15,000 of recapture tax at sale. Sellers are sometimes surprised to learn recapture applies even to depreciation they never actually deducted. This is squarely CPA territory — bring your depreciation schedules to that pre-listing tax conversation.
The 1031 option for true rentals
If the property has genuinely been held as an investment or rental — not primarily for personal use — a 1031 like-kind exchange can defer the entire federal gain by rolling the proceeds into another investment property under strict identification and closing deadlines. The IRS draws real lines between personal-use vacation homes and investment property, and a house your family uses most summer weekends generally won't qualify. If your lake house has been run as a rental business, ask your CPA whether an exchange fits before you sign a purchase and sale agreement (the P&S — the binding contract in a New Hampshire home sale), because the exchange has to be structured up front.
The 2026 second-home surcharge debate: what's actually on the table
If you've followed New Hampshire news this year, you've seen the headlines: legislative proposals introduced in January 2026 — covered by NHPR and the Concord Monitor — would add a property-tax surcharge on second homes and short-term rentals valued over $500,000. We've had a steady stream of owners asking whether they should sell before it passes, so let's be precise about where things stand: these are proposals, not law. Bills get amended, narrowed, and killed in Concord every session, and as we write this nothing has been enacted. It's a story worth watching if you own a vacation property here — and it says something real about the political conversation around second homes in high-demand towns — but it is not, today, a line item on anyone's tax bill.
Our advice is the same one we give on interest rates: don't let a headline make a six-figure decision for you. If selling makes sense on the fundamentals — your family's use of the place, carrying costs, the equity you'd unlock, the strength of the current market — then sell into what remains a genuinely strong market for vacation property. If it doesn't, a proposal that may never pass is a poor reason to rush. The current market backdrop is covered in our New Hampshire housing market 2026 report; the short version, per Roche Realty Group's first-half 2026 review, is that Lakes Region prices rose 10.3% year over year with a median of just 16 days on market, and Winnipesaukee waterfront posted a $2.3 million median with dollar volume up roughly 43%. Sellers are not negotiating from weakness.
Timing the sale: a lake house and a ski condo run on different calendars
Statewide, June and July bring the strongest prices and May the fastest sales, per Houzeo's analysis of New Hampshire sale data — but second homes are bought on emotion as much as spreadsheet, and the property should be listed when it's easiest to fall in love with.
Lake and waterfront: show the water working
A lakefront home wants to be photographed and shown from late spring through summer: dock in, boat at the mooring, water sparkling, outdoor furniture out. Buyers touring in July can picture the August they're buying. The same property in November — dock stacked on the lawn, lake the color of slate — asks buyers to do imaginative work most won't do, and offers tend to reflect it. If you're aiming for a summer sale, the prep clock starts in late winter: photos, repairs, and septic work all take lead time, and our Ready-to-Sell Program can cover up to $2,500 in advanced prep costs plus a complimentary pre-listing inspection for qualifying listings, settled at closing.
Ski condos: catch the early-winter wave
A Waterville Valley or White Mountains ski condo runs the opposite calendar. The buyer urgency peaks from October through the first weeks of ski season, when families decide they're done renting for another winter and want keys before the holidays. We see it from our own front door: the Campton office sits on Route 49, and on ski Saturdays the road past the window is a rolling parade of exactly the buyers a valley condo needs — early winter listings meet them at peak motivation, while a ski condo listed in April meets buyers who just put their skis away. Fall foliage brings a genuine second wave of lookers to both property types — plenty of lake and mountain purchases start with a leaf-peeping weekend.
What waterfront buyers will scrutinize: septic, shoreland, docks, and access
Waterfront diligence is real diligence, and today's buyers — and their agents and lenders — come prepared. Getting ahead of these items is the cheapest negotiating leverage a lake seller can buy.
Septic systems
Most lake properties run on private septic, and when we walk a lakefront listing for the first time, the septic record is the first thing we ask for — because it's the first thing the buyer's side will ask for too. New Hampshire law (RSA 485-A) requires sellers of developed waterfront property to have a septic system site assessment done for the buyer, and beyond the statutory paperwork buyers routinely order full septic inspections. A failed or marginal system near the water is the classic deal-killer — replacement near shoreland can run well into five figures and requires state approval. If your system is old or undocumented, find out where it stands before the buyer does. New Hampshire's disclosure rules also require written disclosure of private water and septic systems generally under RSA 477:4-c and 4-d — our NH seller disclosure guide covers the full list, including the radon, arsenic, lead, PFAS, and flood-hazard-zone notifications that RSA 477:4-a, as amended effective January 1, 2025, requires buyers to receive before a P&S is executed.
Shoreland rules
The Shoreland Water Quality Protection Act (RSA 483-B) governs what can be built, cut, and altered within 250 feet of the state's larger lakes and rivers — setbacks, vegetation buffers, impervious surface limits. Buyers' agents increasingly ask whether past work near the water was permitted, and unpermitted alterations can surface in title or town records at the worst possible moment. Know what's been done to your shorefront and have the permits in a folder.
Docks and waterfront rights
The dock is often the most valuable thousand square feet of the property, so expect questions: is it permitted or grandfathered, is it registered with NHDES, does it convey, and — for lake-access homes — exactly what do the deeded beach or mooring rights say? Assemble dock permits, association documents, and deed language before listing. A seller who can answer dock questions crisply keeps momentum; one who can't watches a week of due-diligence delay take the heat out of an offer.
Private roads and association documents
Two more items that trip up second-home sales in our market specifically. Many lake and mountain properties sit on private roads, and buyers' lenders now routinely ask for a written road maintenance agreement — who plows, who grades, who pays — before they'll clear the file; if your road runs on a handshake, getting something in writing before listing can save the deal weeks later. And in resort communities like Waterville Valley or Owl's Nest, the association document package (declaration, budget, reserves, rental rules) is part of the product you're selling — order it early, because a slow condo-doc turnaround stalls more resort closings than inspections do.
Your buyer probably lives out of state — market like it
Here's the structural fact that shapes everything about marketing a New Hampshire second home: most of the buyers aren't in New Hampshire. They're in Massachusetts, southern New England, and the New York metro, shopping online at night and touring on weekends. That has two consequences. First, presentation is everything — the listing photos, video, and floor plans are the first showing, and often the only one before a buyer decides to make the drive. Second, reach beats luck: the listing has to surface where those buyers actually search, which is a function of MLS syndication, digital marketing, and a brokerage that fields out-of-state inquiries seven days a week. This is our home market — you can see how we present lake and mountain properties in our recent sales, and our Lakes Region waterfront guide is one of the pages those buyers are already reading when they start dreaming.
If it earned rental income, the history helps — documented and conservative
A second home with a short-term rental track record can genuinely widen your buyer pool: alongside pure vacation buyers, you'll draw buyers who want the place to help carry itself. But rental history only helps when it's documented and presented conservatively. That means actual statements and tax records, not projections; occupancy and gross figures a buyer's lender and accountant can verify; and honest notes about what's included (many towns regulate short-term rentals differently, rules continue to evolve, and stays under 185 days carry New Hampshire's 8.5% Meals & Rentals tax). We manage vacation rentals in these towns ourselves, so we read a rental history the way an operator does — we know what a winter of guest turnovers does to a hot tub cover, what a plow contract on a steep private drive actually costs, and what deferred guest wear looks like in photographs — and so do the savvier buyers. Never let a listing promise income; buyers discount hype, and rightly so. If you're weighing whether to keep renting or sell, our short-term rental analysis can put numbers on the hold option, and our rental management team sees what these properties actually earn season by season.
The pre-listing document checklist for a NH second home
Nearly every delay we see in a second-home sale traces back to a missing document. Here's the stack we help sellers assemble before the listing goes live:
- Deed, survey or plot plan, and any deeded beach, mooring, or right-of-way language
- Septic site assessment (required for developed waterfront under RSA 485-A), system design or approval, and pumping records
- Well test results and any water treatment records
- Shoreland (RSA 483-B) permits for past work within the protected zone
- Dock permit or registration and any grandfathering documentation
- Association documents: declaration, bylaws, current budget, reserves, rental rules
- Road maintenance agreement for private roads (lenders ask)
- Receipts for capital improvements (they raise your basis) and, if rented, depreciation schedules and rental statements
- The statutory disclosure items: private water/septic/insulation (RSA 477:4-c/4-d) and the radon, arsenic, lead, PFAS, and flood-zone notifications (RSA 477:4-a)
Frequently asked questions
Do I pay capital gains tax when selling my NH lake house?
New Hampshire itself won't tax the gain — the state has no tax on capital gains, and the Interest & Dividends tax was repealed as of 2025. But if the lake house is a second home rather than your primary residence, the federal government taxes the full gain at long-term capital gains rates (0/15/20% plus possible 3.8% NIIT), with no Section 121 exclusion. Your basis — purchase price plus documented improvements — determines the gain, so gather those records and confirm the math with your CPA before listing.
When is the best time to sell a lake house in New Hampshire?
Late spring through summer, almost without exception. Buyers pay for the summer they can see: dock in the water, boat at the mooring, swimmers off the point. Statewide data backs the seasonal tilt — June and July bring the strongest prices per Houzeo's analysis — and it's amplified for waterfront. Start preparing in late winter so photos, repairs, and septic paperwork are done when the ice goes out. Ski condos run the opposite calendar, with peak urgency in early winter.
Should I sell my second home before the NH surcharge passes?
The second-home surcharge discussed in early 2026 is a legislative proposal, not law — it may pass, change substantially, or die in committee. We'd counsel against making the decision on a headline. Decide on fundamentals: how much you use the place, what it costs to carry, what the equity could do elsewhere, and the strength of today's market. If those point toward selling, the current market is a strong one to sell into; if they don't, a proposal is a thin reason to rush.
What will buyers inspect on a New Hampshire waterfront property?
Expect focused diligence on the septic system (a site assessment is required for developed waterfront sales under RSA 485-A, and buyers usually add a full inspection), shoreland compliance under RSA 483-B for any work within the protected zone, and dock permits and waterfront rights. Sellers who assemble septic records, shoreland permits, and dock documentation before listing keep deals moving and protect their price.
Can I do a 1031 exchange on a New Hampshire vacation home?
Only if the property has genuinely been held as an investment or rental rather than for personal use. A 1031 like-kind exchange defers the federal gain by rolling proceeds into another investment property under strict identification and closing deadlines, but the IRS distinguishes between investment property and a vacation home your family uses regularly — the latter generally does not qualify. If yours has operated as a rental business, ask your CPA before signing a purchase and sale agreement, because the exchange must be structured up front.
How much is the real estate transfer tax when selling a second home in NH?
Under RSA 78-B, New Hampshire charges $0.75 per $100 of the sale price to the seller and the same to the buyer — 1.5% combined, with a $20 minimum on each side. The seller's share works out to about $4,013 on a $535,000 sale and $6,375 on an $850,000 sale. The rate is the same whether the property is a primary residence or a second home.
Get a real number on your lake house or second home
Every second-home sale starts with the same two questions: what is it worth, and what will you keep after taxes and costs? We can answer the first this week with a free professional valuation built from real waterfront and resort comps — and help you frame the second for the conversation with your CPA. See how we work with sellers on our sellers page, read the step-by-step process in our NH Seller Guide, or talk to our team — we've spent years matching lake and mountain properties with the out-of-state buyers looking for them.
This guide is general information for New Hampshire second-home sellers, not tax or legal advice. Rules change — confirm the specifics of your situation with your CPA and your closing attorney.
Sources and further reading
- IRS Topic No. 701 — Sale of Your Home (Section 121 exclusion)
- McLane Middleton — Real Estate Tax Considerations in New Hampshire
- NH RSA 78-B — Tax on Transfer of Real Property
- NH Department of Revenue Administration — Real Estate Transfer Tax FAQ
- NH RSA 483-B — Shoreland Water Quality Protection Act
- NH RSA 477:4-a — Notification Required Prior to Purchase and Sale
- NHPR — Proposal Would Tax NH Second Homes and Vacation Rentals
- Concord Monitor — Property Tax Proposal Targets Second Homes