Is the 2 of the last 5-years Exemption Still available to Sell your Home or Investment Property and Possibly Exclude Some of the Capital Gains Tax? By Ron Benning, Broker
2 of the last 5-Year Capital Gains Exemption
Is the 2 of the last 5-years Exemption Still available to Sell your Home or Investment Property and Possibly Exclude Some of the Capital Gains Tax?
By Ron Benning, Broker
In this article I am going to give a brief outline of this concept with the understanding that I am giving neither legal or tax advice. This basic overview of this concept should be a starting point in your understanding and due diligence of this process. I advise talking to a qualified investment tax preparer or tax attorney before trying to use this exemption. The tax code is constantly changing so any of this could change at any time.
I hear people say quite often that there are no good tax exemptions left. Over the years many of the good exemptions have been eliminated, but this one still is beneficial to many people. The idea of converting a long time rental into a primary residence to retire into or to sell it and reduce your capital gains taxes is a very interesting thought! This takes some preplanning and an understanding of this exemption to do it right.
I am quoting right off the IRS website here:
"Question- A property was my principal residence for the first 2 of the 5 years ending on the date of the sale of the property. For the 3 years before the date of the sale, I held the property as a rental property. Can I still exclude the gain on the sale and if so, how should I account for the depreciation I took while the property was rented?
Here is a link to the IRS website that explains this concept.https://www.irs.gov/faqs/capital-gains-losses-and-sale-of-home/property-basis-sale-of-home-etc/property-basis-sale-of-home-etc-5
Feel free to call me to discuss your real estate needs in more detail at (916) 730-3846.