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I rented out my Alexandria primary home July 22 of 2015. Sold home on July 3 of 2019. Can I avoid capital gains because it wa my primary residence and first home?

 
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2 Replies
dmertz
Level 15

I rented out my Alexandria primary home July 22 of 2015. Sold home on July 3 of 2019. Can I avoid capital gains because it wa my primary residence and first home?

It appears that you lived in the home for only 384 days during the period from July 2, 2014 through July 3, 2019, not the 730 days necessary during that period to meet the residency requirement for eligibility to exclude gain.

Anonymous
Not applicable

I rented out my Alexandria primary home July 22 of 2015. Sold home on July 3 of 2019. Can I avoid capital gains because it wa my primary residence and first home?

you would have had to live in the house 730 days out of the 5 year period starting 7/2/2014 and ending on 7/2/2019.  for purposes of the exclusion you only lived in it 7/2/14 -7/22/2015.

 

 

 

your gain may be divided into two parts 1) capital gain for any gain over and above the net basis of the house (cost reduced by depreciation)   and  2) depreciation recapture.   if your capital gain and income is low enough you could pay 0% taxes for federal purposes, but the depreciation you took will be recaptured and taxed at around 25%.    recapture would apply even if you met the 2 out of 5 year rule.

 

 

if you had asked about ways to avoid taxes completely, it should have been done well before selling.    as rental property, it qualified for IRC 1031 exchange sometimes referred to as a Starker exchange  (basically you buy other rental property to replace the property you sold) .  the downside to this is that to avoid taxes completely, you could get no cash or non rental property out of the deal.    too late now.    if you buy more rental property, you might want to remember this and make inquires  because tax laws are constantly changing.    

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