If I lease my home of 7 years then sell it, will I have to pay capital gains tax?

Question

This home was my primary residence, I put it up for sale but it has not sold. I'm thinking of leasing it for a while, will I have to pay capital gains tax if I do sell it after the lease?

Answer 1

No. as long as you have lived in it 2 of the 5 years prior to the sale. The capital gains exclusion is $250,000 for a single homeowner & $500,000 if married.

Answer 2

If you lease your house you will have to declare the proceeds of the lease as income.You can offset that income with any expense generated by leasing. If the lease is in force when you sell it, there is a possibility the sale cannot be finalized until the lease period has expired. Capital gains are paid on the difference of what the property sold for and the original cost plus improvements. The question of how the tax law applies to leasing vs your occupancy is for the real estate lawyer.

Answer 3

Yes you will. The waiver of capital gains tax ONLY applies to your primary residence.

The only other way to avoid capital gains, is since it is a rental property, if you rolled over the profit into ANOTHER rental property, and you have exactly 180 days from one closing to another to complete the transaction...otherwise you get hit with the full tax and penalties..there are NO exceptions to this.

If you keep the profits or roll them into a primary residence, you pay capital gains.

It's accounting 101, and any CPA can verify that.

Answer 4

The above "2 out of 5 year" answers are correct. The other possibility open to you is doing a 1031 Tax Deferred Exchange into another piece of Real Estate.

Answer 5

your taxes are vacatedif you live in the home 2 yrs out of the last 5yrs

Answer 6

yes...unless you have lived in the house for 6 months over the last year. if you can prove that you can, you can claim an exception and avoid the tax