topic Selling an aggregated rental property that was once primary residence in Investors & landlords

Selling an aggregated rental property that was once primary residence

user17671286960 — Tue, 30 Dec 2025 21:13:34 GMT

I converted a primary residence (lived in since July 2018) to a rental property in April 2025, spending several thousand dollars preparing it. I was unable to secure a tenant throughout 2025. To maximize my tax savings, I plan to aggregate all of my properties (four units) for 2025 tax year, including the one converted from primary residence. If the property is aggregated with the other properties I have, will the "2 in 5 rule" still apply if I sell before April 2028?

Re: Selling an aggregated rental property that was once primary residence

Mike9241 — Tue, 30 Dec 2025 23:48:02 GMT

aggregation does not affect the rules for the home sail gain exclusion. you will have to recognize depreciation recapture which comes before the HSE

Re: Selling an aggregated rental property that was once primary residence

user17671286960 — Mon, 12 Jan 2026 20:41:34 GMT

Thanks, Mike. Does it make a difference if I put the property into an LLC?

Re: Selling an aggregated rental property that was once primary residence

DaveF1006 — Tue, 27 Jan 2026 19:49:58 GMT

No, if you are a Single-Member LLC. If you add a partner (other than a spouse), the LLC becomes a partnership. This could jeopardize the exclusion because the entity—not you—now owns the residence.

@user17671286960