topic Taxes mixed use in Investors & landlords

Taxes mixed use

Cavachon1 — Mon, 17 Nov 2025 12:02:30 GMT

This appears to be what I was looking for:

Treasury Reg. §1.121-1(e)(1) says:

If a taxpayer uses property partly as a personal residence

and partly for another purpose,

the exclusion applies to the entire property,

except for depreciation allowed or allowable after May 6, 1997.

Re: Taxes mixed use

pk — Mon, 17 Nov 2025 19:16:48 GMT

@Cavachon1 true as long as you meet the other eligibility criteria ( 2 years ownership for at least one filer, 730 days of usage as main residence -- for both filers -- with a look back period of five years from the date of sale closing) and no exclusion claim in the preceding two years. Also the sale must cover whole property , e.g. in the case of one building with two separate units ( one used as residence and one for rental), the whole building must be transferred for this reg to apply.

Does this make sense ?

Is there more one of us can do for you ?

Re: Taxes mixed use

Cavachon1 — Mon, 17 Nov 2025 23:45:01 GMT

Pk, Thank you for your reply. I’m not sure what you mean by the whole building must be transferred for this reg to apply. For clarification, it’s a single-family home. Perhaps you mean, you can’t sell just one unit, you have to sell both? Both are being sold together at the same time. Also, the other eligibility requirements have been met.

Re: Taxes mixed use

pk — Tue, 18 Nov 2025 00:51:17 GMT

@Cavachon1 , sorry for the confusion --- while the Treasury Reg generally implies time i.e. you use the prop as residence for some time and then/priorly used it as income, the same logic can also be applied if one has a building where one portion is used as rental while the rest is used for residence. Your case , from your clarification, is one building used as income for a period and also as residence at another period. Thus you are good to go.

Is there more I can do for you ?

Re: Taxes mixed use

Cavachon1 — Tue, 18 Nov 2025 01:12:47 GMT

I signed sellers closing documents today. I believe the closing agent will file a 1099-S, but TurboTax should apply section 121 exclusion and any capital gains up to $250,000 should be excluded.