Primary Residence turned into Rental

[Marty Summers]

Hey Everyone,

We have just moved into another home recently.  We lived in our recent Residence for 12 years.  I am considering renting out my old home and understand that we will lose our mortgage exemptions on taxes. 

However, Can anyone tell me if I turn my old Primary residence into a rental, do I lose the ability to sell my home "without" paying capital gains from where I purchased it 12 years ago?

Thanks much!

-Marty

[Dave Foster]

@Marty Summers You will retain the ability to use the 121 primary residence exemption as long as you qualify for it.  This means that you sell when you can document that you have lived in the property for 2 out of the 5 years immediately prior to sale.  So if you just moved out then you have a little less than three years that you can rent it and still qualify for the exemption.

When you sell you will still have to recapture depreciation unless you also do a 1031 exchange at the same time.