Tax impli's of Converting Pri to Rental?

[Chris Franklin]

Hello, thank you for reading and answering this Q.

I want to convert my primary SFR to a rental, longterm, selling after aprx 8-10 years

bought at 280k /owned for 10 yrs. Worth today about 560k. Filing as single, unmarried.

I believe after 3 yrs (2/5 rule) i may loose my 250 tax exemption, but do i retain some type or amount of tax exemption at the amount the property is worth at the time of the conversion to a rental, ie: Is my new tax base the value of the home at the time of conversion? or will i get some type of credit lessening the Capitol gains hit because the prop was my pri res for 10 years? The answer will effect weather i sell it, as i'm buying a new primary, or the preferred route of renting it out, then selling it later to take advantage of 10 yrs of appreciation to then help payoff my new mortgage? 

[Natalie Kolodij]

Originally posted by @Chris Franklin:

thank you so much for this answer, and the idea of selling to my llc. gold. 

Just selling it to an LLC won't give you the exclusion.

It needs to be a corporation- and holding REI in a corp presents other issues so I'd recommend sitting down with your CPA to see if this option makes sense for you.