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Updated over 3 years ago,

User Stats

13
Posts
3
Votes
Sherry W.
3
Votes |
13
Posts

Can I avoid 1031 Exchange and take the $250K exclusion on rental?

Sherry W.
Posted

I've Googled this extensively, and asked my accountant (who is not a real estate CPA)--

Here are the basics:

--We built the house in 2000

--Divorced in 2009, house was quitclaimed to me

--I lived in the house until mid-2011

--Rented it out from mid- 2011 to present

I am selling it now, moving out of state for a job,and have been trying to avoid a 1031 exchange, AND paying $$$ in taxes.  I read IRS Publication 523, to qualify for the exclusion of gain, and it states that: 

"You meet the standard requirements if any of the following events occurred during the time you owned and lived in the home you sold"  -

  1. --Became divorced or legally separated

Since I did get divorced while owing the home, am I able to claim the $250K exclusion?  I understand that I will be taxed on the recapture of depreciation...and am ok with that, rather paying tax on the whole gain?

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