Yes,
when selling a second home you would, in general, owe capital gains taxes on any profit you make when selling it. But certain exclusions may apply. Generally, if your second home was your primary residence for at least two of the five years immediately preceding the sale (known as the "2/5 year rule"), you can avoid part of the capital gains taxes on up to $500,000 of profit for joint filers (up to $250,000 for single filers) on the sale.
Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.
The percentage of capital gains tax that you'll pay on a home that meets the exclusion requirement is based on the amount of time between January 1, 2009 and the date on which the home first became your primary residence for purposes of the 2/5 year rule. Say you bought a vacation home on January 1, 2007, made it your primary residence on January 1, 2015 for two years, and sold it on January 1, 2018. In such a case, the primary-residence sale exclusion applies to three out of the nine years between 2009 and 2018, or 33.33% of the time between January 1, 2009 and the sale. Thus, 33.33% of your profits from the home sale would be tax-free, up to the $500,000 primary-residence sale exclusion limit.
But don't think you can split time between two homes and then sell them and claim them both as your primary residence. The exclusion does not apply to a second home sale that occurs within two years of you using the primary-residence sale exclusion on a different house, subject to limited exceptions. If you're contemplating the sale of your second home, you should consult your personal tax advisor to determine whether you may qualify for the primary-residence sale exclusion.