Tax implications when I sell a property

[Ian Russell]

Hi I have a property in San Jose California that I bought in 2011.  It was my primary residence until last year when a job took me out of state.  I still own the property but it is now a rental.  I have rented it out for one year.  I thought there may have been something that states if you live in a property for two years or more you get some kind of tax break?  I think now that its a rental house this may now not be the case?   Anyways I purchased the property for 388,000 and its now around 850,000.  Im thinking of selling it but wanted to know about the tax implications first.  Your feedback would be appreciated.

thanks

Ian

[Marcy Moyer]

Ian,

As was stated you get a $250,000 capital gains exclusion if you are single, and $500,000 exclusion if you are married if you sell your primary residence. The rule is you have to live in your home 2 out of the last 5 years of ownership for it to qualify as your primary residence, so renting it out is fine for a few years before you sell it. Check with a tax professional in case there are any quirks in your situation.