All Forum Posts by: Eric Peterson

@Eric Peterson, you said "almost" 3 years and "over" three years. If it's "almost" then you could still take the sec 121 exclusion. If it's "over" then you don't qualify - all or nothing.

Your two options would be - move back in (sounds like that's a nonstarter and then you'll have conversion issues and prorations of tax free gain).

Or you could do a 1031 exchange and defer the tax indefinitely by following the process and purchasing more investment real estate.

All or nothing is what I was wondering about. Thank you

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None of those are possible, or at least not the best option. The home is going to be sold either way so the tenants will have to move out sooner than they would like to.

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Originally posted by @Andrew B.:

From what I've read, capital gains exemption only applies if it was owner occupied for 2 out of the previous 5 years. I believe that means if you live there for 2 full years, then sell it before the end of the fifth year you get it. If you sell after fifth year, you get nothing.

Hopefully someone more knowledgeable can confirm my understanding. As always, this is not professional advice, and you should seek it when making your decision.

"If after the fifth year, you get nothing." Thank you. That's what I was asking. There is a lot of info about what happens if the home isn't owner occupied for 2 years and exceptions in that case. It's hard to find anything that talks about what happens if you go over the 3 years of it being a rental.

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Originally posted by @Joe J.:

@Christopher Phillips

I'm guessing what @Eric Peterson failed to mention was that it was a primary residence initially and then converted to a rental?

If so, I believe it is all all or nothing exclusion.

Here's some additional information on Pub 523:

https://www.irs.gov/publications/p523/ar02.html#en...

Yes, that's what I left out.

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I didn't explain the situation very well. This was a primary residence that was owner occupied for over 2 years and then rented out for almost 3 years.

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Can anyone tell me what happens if a home has been renting out for just over 3 years in terms of the capital gains exclusion. Do you lose the entire benefit or is there a sliding scale.

Let's say you're trying to decide on selling a home after 2 years and 10 months of being rented vs waiting until 3 years and 4 months. Tenants living in the home want to extend the lease an extra 6 months because of building a home but the tax hit would be large if the capital gains tax has to be paid on the entire gain from when the home was purchased.

I can't find anything that references this online and my CPA is out on vacation until next week.

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All Forum Posts by: Eric Peterson

Eric Peterson has started 5 posts and replied 16 times.

Post: Capital gains for a property rented just over 3 years

Post: Capital gains for a property rented just over 3 years

Post: Capital gains for a property rented just over 3 years

Post: Capital gains for a property rented just over 3 years

Post: Capital gains for a property rented just over 3 years

Post: Capital gains for a property rented just over 3 years