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Updated over 3 years ago,
Sec 121 for Single/Multi Conversion/Adjust Basis for DIY Work
I'm renovating a large, single damily home in a rural area with high demand for rentals. I have liced in the home 2 years and initially planned to sell tax free via section 121.
Now im considering renting the home for two years before deciding to sell or not. The issue is that I would like to rent it as three units (which it can be easily equipped for).
Will having it rezoned for three units (which is simple) and then renting them for two years affect my section 121 if i decide to sell at that time?
Second issue ia that I bought this place for 70k, but 40k into it, including 95% of the labor, and it will be valued around 400k as a finished single family.
If i decise to rent it out how can I raise my cost basis to reflect the value and use depreciation to offset the high rents? Is there a creative or standard solution to this situation?