All Forum Posts by: Chase Burge

@Clayton Mobley thank you so much for you reply, it was very helpful. My end goal is really to acquire properties in the Midwest (where they cashflow much better than here) and move there permanently. I want to avoid paying a large amount of my capital in taxes so that I can move it into more properties in the Midwest. 

Property A is here in San Diego and I break even with it and am mostly riding the appreciation wave right now. Market rents don't support a raise in rent to support the fee of a property manager if we leave the area. Property B we did a live in renovation and created a good amount of equity that we are looking to recover. 

Property A would be a challenging 1031 exchange because it is valued at $720,000 and getting a property of equal or greater value in the Midwest is honestly a little daunting because of the size that would be. We would have less than 20% equity so using those gains as a down payment on that property of equal or greater value would not work.

@Dave Foster, sorry for the confusion. That was a typo. We moved out in September of 2017.

I was doing more reading and came across this:

Capital Gains from Selling Your Home

Selling a home that you’ve owned for many years can result in a very large long-term capital gain. Fortunately, it’s likely that you can exclude (that is, not pay tax on) a large portion — or even all — of that gain.

If you meet three requirements, you’re allowed to exclude up to $250,000 of gain. The three requirements are as follows:

1. For the two years prior to the date of sale, you did not exclude gain from the sale of another home.
2. During the five years prior to the date of sale, you owned the home for at least two years.
3. During the five years prior to the date of sale, you lived in the home as your main home for at least two years.

I have known about this rule for a while but the first criteria looks new to me. Therefore, I should include a bit more information. We will be selling our current home that we have owned for 16 months to move back into the first house mentioned. We are trying to get back to the Midwest closer to family and don't want to wait more than 6 months. 

I am starting to think we will have to bite the bullet and pay the capital gains tax on the first house mentioned. We don't have enough equity in it to be able to swing a 1031 exchange "trade up" because the value is around $720,000.

My wife and I lived in a house from March 2016 to September 2018 (almost exactly 18 months to the day). We then rented it out after we relocated across town. If we move back in for 6 months are we able to avoid the capital gains? 

From reading other forums I understand it is not necessary to have exact dates and/or proof of those dates. I just wanted to ask about my specific situation since it seems like the posts I came across no one moved back into their property to capture the full two out of the last 5 years.