Capital gain question

12 Replies

Hi guys i have a question for everyone and hopefully someone can help me out about me selling my home. I bought the home in February of 2017 and i rented it out in November of 2019. My tenants are moving out this end of the month and i am selling my home. The question is am i good on keeping all of the capital gains or do i need to prepare for a 1031 exchange? I live in the house for almost 3 years and rented it for a year. Thanks in advance

If you're single you'll be good on capital gains up to $250K and $500K if you're married.  If you have more gains than that, congrats and you should consider a 1031 exchange. 

Originally posted by @Domingo Cano :

Hi guys i have a question for everyone and hopefully someone can help me out about me selling my home. I bought the home in February of 2017 and i rented it out in November of 2019. My tenants are moving out this end of the month and i am selling my home. The question is am i good on keeping all of the capital gains or do i need to prepare for a 1031 exchange? I live in the house for almost 3 years and rented it for a year. Thanks in advance

 As Scott says, no need to 1031 exchange unless your basis is greater than $250,000. To figure this out, speak with your accountant who prepared your real estate income (if you did) to determine how much basis you have left. Hope that helps!

@Domingo Cano , And if your gain exceeds the 250/500k threshhold then you'll actually want to do both!  

You can take the first 250/500K of profit tax free.  and the rest you can do a 1031 exchange on.  The primary residence exclusion is tax free money.  The 1031 is tax deferred but also defers depreciation recapture.

@Domingo Cano

You have an option of potentially doing either a 1031 exchange or a section 121 exclusion. It is likely more beneficial to do a 121 exclusion in this case as the gain will be excluded instead of deferred.