can we rent our house for 1 yr, move back-in. will we still beaboe to qualify for the $250,000 no capital tax

Question

Hi, I am a non-resident & non-citizen; have built a house and use as my only home when in the states. I & my fiansee plan to live out of the USA for about two years. Concerned about loss of benifits regarding capitol gains up to 250,000. So, if I rent-out the hose to an friend or whoever, and move back in two years and live in my home, because I am not a company can I still sell the house and qualify for the capitol gains program? And can I live in the house a year and then sell and still qualify for the no taxes up to $250,000.? Also, as an individual, we built the house ourselves. The market is down now but the cost of building and the sell price, the differance is what the taxes are based on. Right?

Answer 1

You may exclude the gain from tax if you owned the home and lived in in as your principal residence for at least 2 of the 5 years prior to the sale. The 2 years do not need to be consecutive, any occupancy of 730 days or more qualifies you for the exclusion.

The gain is the difference between your cost basis and the net proceeds of the sale. Those need a bit of explanation especially in your case.

Your cost basis is what it cost you to acquire or build the home. The land and all materials, and any labor that you paid for are included. Do NOT include the value of your own labor, however. If you make any improvements to the home after it's built you add those to your cost basis. Do NOT include the cost of routine repairs and maintenance, however. If you rent the home out you MUST reduce your basis by the amount of depreciation you claimed OR COULD HAVE CLAIMED while it was rented out. That depreciation recapture WILL be taxed even if you qualify for the exclusion!

The net proceeds from the sale are whatever you sell the home for less any selling expenses such as realtor commissions and closing costs you actually paid.

If your filing status is Single, Head of Household or Qualifying Widow or Widower, the first $250,000 in gain is excluded from tax. If your filing status is Married Filing Jointly the first $500,000 in gain is excluded from tax. But remember, any depreciation allowed OR ALLOWABLE while it was rented out bypasses the exclusion and WILL be taxed.

Answer 2

2

Answer 3

I recommend that you hire a Certified Public Accountant, an Enrolled Agent, or an Attorney who specializes in tax law.

As I understand the law, your must live in the house as your principal residence for 2 out of the last 5 years to qualify for that Capital Gains tax exemption..

Answer 4

I believe that as long as you can establish that this house was your primary residence for two years, then you can claim the 250,000 tax exemption.

Yes, the tax is on the capital gain of your house once you sell it. It is the selling price minus the basis of the house (i.e. how much it cost you to build it). It would be a good idea to keep good records of your house building cost. Make sure that you are not adding maintenance costs to your basis. That does not count.

Answer 5

Rent-To-Own Homes : http://RentToOwnHome.uzaev.com/?EPRn