Capital Gains Tax On A House Hack

5 Replies

Hi, my wife and are are listing our duplex that we have owned and been house hacking for over two years. Does the capital gains tax exemption include the entire property or just for the 50% that we have lived in? It sounds like a simple question but I have not been able to find consistent info. Would love any insight and/or accountant recommendations in Milwaukee. Thanks!

Originally posted by @Bryan Falk-Steinmetz :

Hi, my wife and are are listing our duplex that we have owned and been house hacking for over two years. Does the capital gains tax exemption include the entire property or just for the 50% that we have lived in? It sounds like a simple question but I have not been able to find consistent info. Would love any insight and/or accountant recommendations in Milwaukee. Thanks!

Yes only 50%. If you were house hacking and it was SFR, not duplex, then it would be 100%.

Depreciation has to be recaptured in both cases.

@Bryan Falk-Steinmetz , You've hit the holy grail of house hacking.  The portion you live in will qualify for the 121 primary residence exemption tax free.  The other allocation could handled with a 1031 which would keep you in the game tax deferred.  Maybe it's another MF that you hack (as long as the value of the investment portion is at least equal to the investment side you sell).  Its a great combination to create some margin in your personal finances without paying tax.