2 Year Homes Sales Exclusion - Apartments 5+ Units

[Carson Smith]

Does the 2 Year Home Sales Exclusion apply to Apartments 5+ Units? (If you live in one of the units 2 out of 5 years, can you avoid paying capital gains?)

[Bob Norton]

@Carson Smith @Jaysen Medhurst Actually, you might be able to claim the Sec 121 exclusion for the portion of the sale of a 5+ apartment building, if you lived in one or more units as your personal residence. The apartment complex would have to be in your name and not in an LLC. The apartment building is considered a residential building for depreciation purposes, so the fact that lenders consider it to be "commercial" is not relevant. Sec 121 does not preclude taking the exclusion for a residence in a residential apartment building, only the portion of the building that you used for business purposes, such as renting to others or a home office.