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roothawg2002
New Member

I plan to sell my rental property for $50K less than I paid in 2007. I also plan to sell my main home for $75K more than I paid in 2013. Are there any tax issues I should be aware of?

 
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IreneS
Intuit Alumni

I plan to sell my rental property for $50K less than I paid in 2007. I also plan to sell my main home for $75K more than I paid in 2013. Are there any tax issues I should be aware of?

On your rental property, it sounds like you will have a long term capital loss, which will be deductible on your tax return since it was on a rental property.  You will only be able to take $3,000 of the loss per year, the balance will be carried forward to future years.

On the sale of your principal residence you may qualify for an exclusion of $250,000 gain ($500,000 if married filing jointly) if all of the following requirements are met:

  • You owned the home and used it as your main home during at least 2 of the last 5 years before the date of sale.
  • You didn’t acquire the home through a like-kind exchange (also known as a 1031 exchange), during the past 5 years.
  • You didn’t claim any exclusion for the sale of a home that occurred during a 2-year period ending on the date of the sale of the home, the gain from which you now want to exclude.


If you qualify for the home sale exclusion, do not include the sale on your tax return (unless the sale was reported on a form 1099-S).

For more information, please see IRS Pub. 523 - Selling Your Home


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3 Replies
IreneS
Intuit Alumni

I plan to sell my rental property for $50K less than I paid in 2007. I also plan to sell my main home for $75K more than I paid in 2013. Are there any tax issues I should be aware of?

On your rental property, it sounds like you will have a long term capital loss, which will be deductible on your tax return since it was on a rental property.  You will only be able to take $3,000 of the loss per year, the balance will be carried forward to future years.

On the sale of your principal residence you may qualify for an exclusion of $250,000 gain ($500,000 if married filing jointly) if all of the following requirements are met:

  • You owned the home and used it as your main home during at least 2 of the last 5 years before the date of sale.
  • You didn’t acquire the home through a like-kind exchange (also known as a 1031 exchange), during the past 5 years.
  • You didn’t claim any exclusion for the sale of a home that occurred during a 2-year period ending on the date of the sale of the home, the gain from which you now want to exclude.


If you qualify for the home sale exclusion, do not include the sale on your tax return (unless the sale was reported on a form 1099-S).

For more information, please see IRS Pub. 523 - Selling Your Home


**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
roothawg2002
New Member

I plan to sell my rental property for $50K less than I paid in 2007. I also plan to sell my main home for $75K more than I paid in 2013. Are there any tax issues I should be aware of?

A friend told me that I might be penalized for selling both houses within two years of each other. Is this true?
IreneS
Intuit Alumni

I plan to sell my rental property for $50K less than I paid in 2007. I also plan to sell my main home for $75K more than I paid in 2013. Are there any tax issues I should be aware of?

No - your friend is misinformed.  They are two different types of property, it might be different if both were your principal residences and any capital gain exclusion would be limited.
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