Capital Gain exclusio

[user17519972176]

Hi

I purchased a first home in 2013 and lived till April 2022 and moved to a second home, I rented first home from Aug 2022 to July 2024 and gain 300 K profit, do I qualify Long term capital gain exclusion on my first home sell capitol gain under 2/5 years Occupancy test or I am liable for capitol gain on profit.  

[DoninGA]

If you sold your primary personal residence and you lived in and owned the home for at least two years in the five year period on the date of sale, you do not have to report the sale if your gains are less then the exclusion amounts of $250,000 if filing Single or $500,000 if filing Married Filing Jointly (and both lived in the home for two years).

Since you lived in your home for at least two years in the 5 year period before the sale you would be eligible for the exclusion.

However, since it was rented, you must do a depreciation recapture and will have taxes owed on the section 1250 recaptured amount.

Gain or Loss = Sales Price minus Sales Expenses minus Adjusted Basis (Purchase Price plus the cost of improvements prior to the sale)

Selling cost can include escrow fees, legal fees, real estate agent commissions, advertising costs, and even home staging fees.

If you had a gain greater then the exclusion amounts then you would have to report the sale. Also, if you received a Form 1099-S for the sale either with a gain or a loss, the sale has to be reported. You will need the online TurboTax Premium edition to report the sale if you are using the online editions. Make sure that you indicate that you want the sale of the home reported on your tax return.

[Opus 17]

You meet the 2 year/5 year rule as long as you closed on the sale before August April 2025 (3 years after moving out).

You can exclude up to $250,000 of gain if single or HOH, and up to $500,000 if married filing jointly, as long as you (and your spouse) have not used your exclusion on a different home in the 2 years prior to the sale.

However, the part of your gain that is due to deprecation that you claimed or could have claimed while the home was a rental, is subject to tax (recapture) before you apply the exclusion to the rest of the gain. 

[dmertz]

Opus 17, move out was stated as being in April 2022, not August 2022.  A sale after some time in April 2025 would be too late to meet the occupancy test.