Will I be taxed if I sold my home?
Hello BP!
Just trying to better understand the tax side of a home sale. I lived in my 3 unit for a little over a year now and plan on selling. Will I be taxed on capital gain?
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- Tax Strategist| National Tax Educator| Accepting New Clients
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There are actually 2 reasons you'll be taxed.
One 2/3 of the property is a rental not your primary (and hopefully has been reported on your taxes as such)
So even if you occupied it for 2 of the last 5 years (the 121 primary residency exclusion) only 1/3 of the gain qualifies.
BUT you've only lived in it 1 year. The IRS has a list of exclusions that will allow for a partial exclusion if you're moving for work, military, ect- so I walk discuss those with your tax pro and see if you qualify for one.
But again- that's only going to make 1/3 tax free. The other 2 units you can roll into a 1031 exchange, or pay tax on.
