Capital gains exemption

6 Replies

I rented out my primary residence for the past two years, but lived in it for the three years prior to that. The tenant has moved out, and now I am considering selling it.

Does the fact that it was recently a rental impact the capital gains exemption for homeowners of up to $250k ($500k if married)?

No, as long as you lived in it for 2 of the last 5 years, you qualify for the exemption.

The only other caveat is that you can only take this exemption every 2 years, so if you sold a different primary and took the exemption within the last two years, you would be ineligible.

Originally posted by @Richard Townsend:

I rented out my primary residence for the past two years, but lived in it for the three years prior to that. The tenant has moved out, and now I am considering selling it.

Does the fact that it was recently a rental impact the capital gains exemption for homeowners of up to $250k ($500k if married)?

 You are eligible for the exemption. You only need to pay unrecaptured 1250  depreciation tax. It is taxed at your ordinary rate capped at 25%.

Basically all the depreciation you took in last two years times the ordinary rate, roughly. 

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Originally posted by @Ashish Acharya:
Originally posted by @Richard Townsend:

I rented out my primary residence for the past two years, but lived in it for the three years prior to that. The tenant has moved out, and now I am considering selling it.

Does the fact that it was recently a rental impact the capital gains exemption for homeowners of up to $250k ($500k if married)?

 You are eligible for the exemption. You only need to pay unrecaptured 1250  depreciation tax. It is taxed at your ordinary rate capped at 25%.

Basically all the depreciation you took in last two years times the ordinary rate, roughly. 

 Hi Ashish,

So for if i was doing a triplex living in 1 unit then another unit 2 years each could I take advantage of 4 yrs of 5 yrs moving from one unit to another with the sect 21 cap gains exemption?

When I convert a rental unit into an owner occ unit then would I have to pay back the recapture dep tax that year?  
I lived in one unit 2016-2018, another unit 2018-2020, and I plan to sell at end of 2020. This is for a triplex that I owner occupy too thanks! Susan

Originally posted by @Susan O.:
Originally posted by @Ashish Acharya:
Originally posted by @Richard Townsend:

I rented out my primary residence for the past two years, but lived in it for the three years prior to that. The tenant has moved out, and now I am considering selling it.

Does the fact that it was recently a rental impact the capital gains exemption for homeowners of up to $250k ($500k if married)?

 You are eligible for the exemption. You only need to pay unrecaptured 1250  depreciation tax. It is taxed at your ordinary rate capped at 25%.

Basically all the depreciation you took in last two years times the ordinary rate, roughly. 

 Hi Ashish,

So for if i was doing a triplex living in 1 unit then another unit 2 years each could I take advantage of 4 yrs of 5 yrs moving from one unit to another with the sect 21 cap gains exemption?

When I convert a rental unit into an owner occ unit then would I have to pay back the recapture dep tax that year?  
I lived in one unit 2016-2018, another unit 2018-2020, and I plan to sell at end of 2020. This is for a triplex that I owner occupy too thanks! Susan

You recapture dep when you actually sell it, not when you convert. 

Although each unit is it’s separate dwelling unit, but you can only do one sec 121 exclusion every two years, doing two simultaneously is not going to happen.