Many of you may know the home sale exclusion act which allows a $250k capital gains exclusion ($500k if married) if you lived in your house and owned it 2 of the last 5 years.
My question is what happens if you rented an apartment for 2 years, then bought it, lived in it for a year, and then rented it out for 3. IN this circumstance you owned it for 4 years, but rented it out for 3, bbut have lived in the house for 2 of the last 5 years.
would u qualify for this exclusion? Or would you have to move in and live in it for 1 more year. thanks!
2007-09-21 11:57:04 · 4 answers · asked by outlawnyc 2 in Business & Finance ➔ Renting & Real Estate
You need another year, time renting to another owner does not apply.
2007-09-21 12:01:03 · answer #1 · answered by Elsa D 6 · 1⤊ 0⤋
They are two separate tests:
The use Test, and the Ownership tests.
They can be two different set of time as long as both add up to at least 24 months of use and 24 months of ownership in the last 5 years.
See: http://www.irs.gov/pub/irs-pdf/p523.pdf
Pg 12
The time Helen lived in her daughter’s home during the 5
year period can be counted as a period of ownership,
the time she lived in her rented apartment during the 5
year period can be counted as a period of use.
But as always, you should consult your tax adviser.
2007-09-21 12:15:07 · answer #2 · answered by realestatescott916 1 · 1⤊ 0⤋
You must live in it while owning it for two years. Time you didn't own it does not count for any purpose.
The two years do NOT have to be sequential.
2007-09-21 12:02:55 · answer #3 · answered by open4one 7 · 0⤊ 0⤋
It HAS to be your primary residence, including being able to qualify for homestesd exemption
2007-09-21 12:01:43 · answer #4 · answered by Anonymous · 0⤊ 0⤋