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creide013
Level 2

Own a condo since 2001 had to move out and live with my parents.

I own a condo since 2001 I lived there till 2016. I  had to move out and live with my parents so I can help take care of them. I rented out the condo while living with my parents. I plan on selling it when the renters move out how would I claim this next year and will I have to Pay Capital gains on the condo since it is the only property I own, OR do I have to purchase a new property and what is the time frame if I have to?

6 Replies
MaryK1101
Expert Alumni

Own a condo since 2001 had to move out and live with my parents.

To qualify for the exclusion of gain on the sale of your primary residence you must live in the dwelling for at least two of the last five years.  You may be able to use a Like-Kind exchange to defer the gain because it was a rental property, but you will still have to pay the gain eventually- as opposed to eliminating it  with the exclusion.

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creide013
Level 2

Own a condo since 2001 had to move out and live with my parents.

If I purchase another property of equal or higher value will this prevent the Capital gains?

 

MaryK1101
Expert Alumni

Own a condo since 2001 had to move out and live with my parents.

It would have to qualify as a Like-Kind Exchange.  This will DEFER the gain so you do not have to pay it now but you will have to pay it later.  If this is something you are considering, please see a competent professional, because there are many requirements and they are often doen incorrectly.

 

@creide013

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Carl
Level 15

Own a condo since 2001 had to move out and live with my parents.

If I purchase another property of equal or higher value will this prevent the Capital gains?

No. Not if you sell one property and then use the proceeds to purchase a new property. To defer the gains, you would have to do a like-kind exchange which is required to be handled/done/performed by a qualified third party intermediary.

If you sell the property *AND* the property was your *PRIMARY* residence for at least 24 months of the last 60 months you owned it (counting back from the closing date of the sale) then you pay *NO* *TAXES* on your first $250,000 of gain.

So a like-kind exchange only defers the taxes, while an outright sale "can" eliminate any taxes on your gain, up to $250K. Provided of course, you meet the "lived in two of last five years" residency requirement. Note that while the rules state it must have been your primary residence for at least 24 months of the last 60 months you owned it, those same rules also state the 24 months do not have to be consecutive, so long as all of those 24 months fall within the last 60 months you owned it.

 

creide013
Level 2

Own a condo since 2001 had to move out and live with my parents.

Thank you for your time, you both have been extremely helpful.

MaryK1101
Expert Alumni

Own a condo since 2001 had to move out and live with my parents.

Glad to help, please ask if you have any other questions!

@creide013

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