topic Selling a house less than 2yrs in Investors & landlords

Selling a house less than 2yrs

djohnson69401 — Wed, 29 Jan 2025 19:05:53 GMT

I bought a fixer house over a year ago thats 50+ miles away from where I live on the intention of having my 62 yo sister and 80 yo mom to move in to, so that my sister could retire and still live in the area; and allow my mom to live with her; and so my sister could sell her house.

Plans changed after my sister unexpectedly passed away before I could complete the renovation and had to relocate my mom closer to me and extended family.

I haven't sold a primary home in over 3yrs and stayed at the project house about 3 days a week while working on it for the past 15 months. I haven't taken any depreciation or have any rental time, as its not renovated.

Now I need to sell the house, but not sure if it qualifies for the irc121 exclusion on the gain or even able to use the 1031 exchange.

Any thoughts are appreciated.

Thanks

Re: Selling a house less than 2yrs

DavidD66 — Wed, 29 Jan 2025 22:26:58 GMT

It does not qualify for the exemption on the exclusion on the sale of primary residence. To be eligible for the exclusion, you have owned and used your home as your main home for a period aggregating at least two years out of the five years prior to its date of sale. Based on what you stated above, it was not your primary residence, so it does not qualify. You could possible do a 1031 exchange, since upon the death of your sister the property went from personal use to an investment.

Re: Selling a house less than 2yrs

djohnson69401 — Thu, 30 Jan 2025 02:34:16 GMT

Sounds like I have a few options-

move in the house for a couple years then sell

rent for a couple years for the 1031 exchange

Sell and take the gain hit

Take the exclusion and hope not to get an audit