Solved: If I rent half of my primary resident and live in the other half for two years, will I have to pay capital gains if I profit from the sale of my primary resident house?
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If I rent half of my primary resident and live in the other half for two years, will I have to pay capital gains if I profit from the sale of my primary resident house?

I bought a house on December 2015 as my primary resident. Did some repair and renovation, and will be ready to rent half of my house in December 2016. I plan to rent half of my house for a year and perhaps sell it on December 2017 if I can make some profit that I expect. So, will I have to pay capital gains tax if I sell it? I am planning to deduct depreciation and all the good stuffs while I rent half of my house.

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Level 9

If I rent half of my primary resident and live in the other half for two years, will I have to pay capital gains if I profit from the sale of my primary resident house?

If it is all one "dwelling unit" (that usually means a shared kitchen), you would only pay tax on the depreciation, but not on any of the other gain.  You pay tax on the depreciation you took, but nothing else.

That is assuming that you live in the home for at least 2 years (730 days) and have not 'excluded' (not pay tax on) the tax on another home in the last two years.

If it is two separate units (like a duplex), you could only 'exclude' your half of the home.

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Level 9

If I rent half of my primary resident and live in the other half for two years, will I have to pay capital gains if I profit from the sale of my primary resident house?

If it is all one "dwelling unit" (that usually means a shared kitchen), you would only pay tax on the depreciation, but not on any of the other gain.  You pay tax on the depreciation you took, but nothing else.

That is assuming that you live in the home for at least 2 years (730 days) and have not 'excluded' (not pay tax on) the tax on another home in the last two years.

If it is two separate units (like a duplex), you could only 'exclude' your half of the home.

View solution in original post

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