Homestead Tax Exemption in MA

[Maximilian Glodde]

Hi All,

I currently own a rental property that I lived in for almost 3 years. I moved out last year in August and have approximately 2.5 years left to sell it and realize a tax free capital gain. Question is, does anyone know whether I would still be able to take this tax exemption if I transfer the property into an LLC? My initial thought is "no". If no is the answer, I should probably just get decent liability coverage.

Thanks

[Marina Draper]

@Dave Foster YES Dave thank you for catching it! That's right, if the property was primary residence PRIOR to renting it, then the exclusion will be applied 100%, as long as the 2 out of 5 rule is met. If the owner moves into the property AFTER renting it out, the time it was rented will be counted as "nonqualified use", and the proration rule will need to be applied. But again, an LLC owning it will not affect the exclusion eligibility.