How can I reduce capital gains tax on a new rental home?
I bought my primary residence 4 years ago for $150k. Now it's worth $200k because of market increases in the area. I'm planning to buy a new house to live in and rent out the old one, but I'm concerned about becoming liable for the $50,000 capital gains tax on the price increase.
I know that I won't have to pay capital gains tax if I sell it now, but I think I will if I rent it out and then sell it in 4+ years. Is that right?
If so, is there anything I can do about it? Is there a way to raise the basis to 200k now so that I won't have to pay as much capital gains tax in the future?