Tax Implications for selling 1.5 year old rental
We lived in our starter home for 19 years, then began renting it out when we moved to our current home 1.5 years ago.
If we decide to sell the rental now, will we be subject to Capital gains taxes since it is not our current primary residence?
Thanks in advance,
Brent
Most Popular Reply
The tax definition is primary residence is "lived in 2 of previous 5 years" meaning you might have a couple properties at a given time that qualify for this tax exemption.
Don't get hung up on the English logic of this not being your current primary because you don't live there now. These are definitions meant to describe the requirements for the tax exemption. Maybe if would sound better if they called it the "Current and recently past primary residence tax exemption", but that's too many words. They just want to convey the basic reason the exemption exists at all.
So, the end result you should take away is that from a tax exemption perspective this is a primary residence if you lived in it 2 of the previous 5 years.