if I rent a property, but don't own it for three years, then buy it and sell it a year later do I pay capital gains?
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Yes, unless you qualify for an exception to the "two out of the last five years" rule.
See https://www.irs.gov/publications/p523#en_US_2023_publink10008938
Yes, unless you qualify for an exception to the "two out of the last five years" rule.
See https://www.irs.gov/publications/p523#en_US_2023_publink10008938
Thank you!
taxpayers who do not meet the two-year ownership and use tests may qualify for a reduced exclusion. A reduced exclusion is available if the primary reason the taxpayer sold a main home was due to any of the following:
for each of these, a safe harbor rule is available. if the safe harbor is not met, a taxpayer can still satisfy one of the above conditions based on facts and circumstances.
Here is a link to @Mike9241's reference:
https://www.irs.gov/publications/p523#en_US_2023_publink100073096
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