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Updated about 1 year ago,
Question Regarding House Hack and Section 121
Hello,
I've read that house hacking can cause tax implications at time of sale. One of those things being how much of the property qualifies for the section 121 of either 250k exemption or 500k if married.
I own a primary residence that I've lived in for 3 years total but for the last 1 year I've been househacking my main floor and I've been occupying my basement. I haven't done taxes yet on my house hack but I was anticipating NOT claiming depreciation so I can avoid recapture tax when I sell the home.. but now im also worried that instead of the 500k that I thought I would be exempt for capital gains I may only have a portion of that available?
Does the IRS care about how long the property have been used as a "rental" to either full qualify or partially qualify for section 121? What would be my best course of action so that I can exempt the full 500k? This is a property that has appreciated significantly so I will need every penny of that 500k exemption.