All Forum Posts by: Jillian S.
Jillian S. has started 2 posts and replied 3 times.
Post: Avoiding Capital Gains on Rentals
- Posts 3
- Votes 1
Thank you everyone for the clarification!
Post: Avoiding Capital Gains on Rentals
- Posts 3
- Votes 1
I'm reading conflicting things regarding capital gains on rentals. According to the IRS site, it looks like one can live in a rental property for 2 of the past 5 years, even if that property was acquired as a 1031 exchange. One must keep the property for a minimum of 5 years. My understanding is that if I do this, for each of my two rental properties, then I can avoid capital up to $250K (I'm single). Only selling one property every two years of course.
Now...I recently read an article stating that, for example, I have the property for 5 years, I live in it for 2 of the 5 years before selling, and it's a rental for the other 3 years. I would only be able to avoid 2/5 of the capital gains, due to the fact that I lived there only 2 years (qualified used), but the other 3/5 of the gains would be taxable because I didn't live there, it was a rental for 3 years (unqualified use). I'm not seeing anything about this on the IRS website, however.
Can a tax attorney or a CPA advise? I'm considering doing a 1031 exchange on two rentals, purchasing in a different city, and over the next 5-10 years, I would live in both of them for 2 of the 5 years before selling them. (maybe...who knows how life changes! haha, but that may be the plan for now). I'd really like to have some solid knowledge on this before doing a 1031 exchange as depending on what the deal is, I may just keep the current rentals.
Thanks in advance!
Post: Pro-Forma vs documentation
- Posts 3
- Votes 1
Hey everyone! I'm somewhat new to investing...I've had rental properties before, although usually I've lived in them, move, and turn it into a rental. Now, however, I'm researching actually investing in a multi-family unit. My question is when do you actually ask for documentation of expenses vs pro-forma? Do you wait to get those actual numbers after the property is under contract or while still researching? I'm having a hard time getting that information while just browsing...even when working with an agent. Any advice? Thanks in advance.