Posted by Bud Branstetter on April 04, 2000 at 22:55:34:
You can do 1031 exchanges on investment property. Not from an investment to one you live in. You can 1031 into an investment property then several years later move in for two more years before selling as you home and not have to recapture or pay tax on the gain. Just where do you live for the two years after the initial move?
Captial gains tax on rental…sell NOW??? - Posted by Glenn OK
Posted by Glenn OK on April 03, 2000 at 22:07:30:
GREAT forum…always something to learn…
My wife and i have a 3 bed home that we bought in 1995…lived there exactly 2 years to the month…for the last 2 years its been a rental…(rented FEB 1998) home was purchased in NOV 1995…now…to avoid captial gains when we sell…should we sell BEFORE we have owned it 5 years? or wait until it has been rented almost 3 years…i am confused on this tax issue and seeking help here first…
I know that to avoid gains…it had to be your primary residence for at least 2 years…is this correct also?
Thanks in advance for advice
Re: Captial gains tax on rental…sell NOW??? - Posted by The Baze
Posted by The Baze on April 04, 2000 at 06:35:55:
Glenn,
Yes, the section 121 exclusion applies to homes that were your principal residence for at least 2 of the previous 5 years. If you sell in 2000, then it will fall into that category. If you wait til 2001, then you lose the year 1995, and you lose the exclusion. BUT, be aware, even if you sell now & get the exclusion, you still have unrecaptured section 1250 gain, and that will be taxed at 25%. Basically, all the depreciation you’ve claimed on the property will now be taxed at 25%. Also, if you take the exclusion now, you can’t take it again for 2 years, so if you’re unsure what you may do w/ the house that is now your principal residence, keep that in mind.
Tom Bazley
IRS rule: Your primary residence for 2 of the last 5 years. (nt) - Posted by Rolfe Kurtyka
Posted by Rolfe Kurtyka on April 03, 2000 at 23:20:56:
nt
Re: Captial gains tax on rental…sell NOW??? - Posted by Skip (CA)
Posted by Skip (CA) on April 04, 2000 at 19:34:00:
Tom:
What about a 1031? Wouldn’t that allow them to avoid all tax consequences for now? Thanks!
Skip