topic Capital Gains on Sale of Lease Option Primary Residence? in Investors & landlords

Capital Gains on Sale of Lease Option Primary Residence?

ndhaon91 — Tue, 15 Feb 2022 15:29:44 GMT

My wife and I live in a home that we rent from Home Partners of America. They purchased the home for $530k in Nov 2020. We are considering moving at the end of this year's cycle, and exercising the option to purchase, which was pre-established when we moved in at $600k. The home is currently valued at $680k and is likely to be well over $700k in Nov.

Our plan is the purchase the home from Home Partners and immediately sell it, possibly in a single transaction. We will have lived in the home as our primary residence, paying rent, for 2 years, but we would have only owned the home for 30 seconds. Will we owe capital gains tax on the sale?

Re: Capital Gains on Sale of Lease Option Primary Residence?

Mike9241 — Tue, 15 Feb 2022 21:15:06 GMT

it would appear so. you don't meet the 2-year ownership test.

Re: Capital Gains on Sale of Lease Option Primary Residence?

Vanessa A — Tue, 15 Feb 2022 21:16:32 GMT

Yes, you will still owe capital gains. The rule is that you must own the house and occupy it for 2 out of the last 5 years. If you own it for 30 seconds, you would not meet the ownership test so you would not be able to use the home sale exclusion.