All Forum Posts by: Tommy F.

Ankit A. The 2009 rule change, I believe, was property not initially used as a primary residence such as a vacation home. Back to the timeline, you can convert your primary residence to rental and pay no cap gains as long as the 2 yrs in past 5 applies. You can move back into the house anytime and reclaim it as primary for 2 yrs, sell and pay no cap gains on up to $250k sf / $500k mfj BUT...you MUST pay depreciation recapture tax of 25% on all the depreciation deductions you took while it was a rental.

Scott F. Yes, $50 gift card for nearby gas stations.

Ankit A. IRS section 121 says in order exclude up to $250k gain, as singler filer, you must have owned and used the house as a principal residence at least two of the last five years prior to date of sale. It can be used as a rental during the five years just be sure you can provide concrete evidence you used it as a primary residence for two years aggregated however you piece it together in five years.

Emily Stevenson the test is which unit is the current expense going? Answer is your personal use unit. The rental unit simply gets private use of what was previously shared. You could increase next time around based on private laundry. Checkout IRS Publication 527 Residential Rental Property.

@Gerald Marshall IRS section 1041 provides that a transfer of property between spouses “incident to divorce” is not taxable in many situations. I suppose there was a Quit Claim Deed transferring title to her and for tax purposes the property transfer is treated like a gift. The recipient of the property takes on the other spouse's tax basis in the property. The effect of the 1041 rule is to defer a taxable event, recognizing a gain or loss, until the recipient, in this case your wife, disposes of the property. So, in basic terms, your wife's cost basis is a carryover from the basis in the marriage.  You should be able to calculate your expected capital gains and decide whether or not to pay tax and move on or defer tax using Sect 1031 exchange. I know you said she didn't live there, but if she had owned and used the house an aggregate of 2 years out of the last five (any time in the house counts), she could likely benefit from Sect 121 exclusion of taxes on sale of a primary residence. This is just for general discussion purposes, you should get an opinion from a local CPA or attorney. Good luck!

Navin Naik in my experience I've had 3 families with bankruptcy, all had professional careers, college degrees, and just got into mess in 2007-2009. Good people, bad situation. They all proved to be good tenants, stayed 2+ years. Eveyone is different, just whatever works for you. Good luck.

Gerald Marshall if your wife lived in the house 2 of the past 5 years there may not be tax to pay. In addition, if she got it as a settlement from prior marriage there may be some exclusions. In either case, you may not need to do a 1031 exchange. You may want to check out IRS Publication 523.

Sean Bell the story told by Jay Hinrichs is spot on. I failed to mention in previous post, that you must endure public hearings and nobody wants ANYTHING in their backyard. Many jurisdictions allow contiguous property owners to file a protest petition and stop you dead in your tracks unless you negotiate a deal. You better not have any wetlands on your parcel because your buildable area will be reduced by that area plus a buffer. Also, you may have X number of acres but subdivision regs require tree save areas that reduce your lot numbers and cut into margins. Irony is the clear cut "nuclear option". If Neighbors want to put you in a pinch, change course and harvest timber and they can only whine as the clear cut begins. It may be the only satisfaction you get. I have a builder friend with very similar story from last year in NC.

Sean Bell Williamson County website has same info. Also look for the Land Use Plan. Along with your current zoning, the county has a "plan" for "your" land. As Jay Hinrichs says, it is exceedingly cash intensive to develop land and lots of risk. Planning Board members come and go and many operate like a high powered HOA and you have to sell them on your plan so they will recommend approval by county council. If recommended, then council can reject it back to the start with Planning Staff for review and then back to Planning Board and on and on and on. You need to have a good plan with financial means and time to follow through. A civil engineer can/will quote you to take it from start to finish, but it will not be cheap and no guarantee the engineer gets it approved. Sorry, but that's how it works in most jurisdictions.

@Sean Bell Go to the Rutherford County website, Planning and Engineering, and download the Zoning Ordinance and also look for Building Codes or Subdivision regulations. Read all those documents, then you can call the Planning Staff and schedule a meeting to discuss what you're interested in doing. They should give you some guidance about who, what, where, when, etc. @J Scott is correct about all of the moving parts in the process. It's not for the faint of heart and anyone lacking patience.  If you're inclined to read more, check out the book "Land Development" by Daisy Linda Kone.  It's a book published by the National Association of Home Builders (www.BuildersBooks.com). Good luck.  MTSU alum shout-out!