lease option tax question

[Wesley C.]

I've lived in my present home for 3 years. I know that if I sell I don't pay capital gains at this point. However, if I rent it or lease option it for another year or two, am I then subject to capital gains taxes when I sell ?

[Steven Hamilton II]

Wesley Chamberlin,

Jon Holdman was off by a year in his statement. You must live in the home 2 out of the last 5 years to qualify for the Section 121 exclusions. You will however, have recapture on any depreciation taken and you MUST take depreciation as when you sell it is the depreciation you took or "WERE ALLOWED TO TAKE".

-Steven the Tax Guy

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