Re: hOUSE/taxes query

Katie:

Then it sounds like I can rent it for 2.999 years and still get tax-free
status on the gain? Correct???

Also, from Paul's reply upon eventual sale I guess I do have to pay taxes on
the depreciation claimed while I rented it . Correct??



"Katie" <katiej_1958@xxxxxxxxx> wrote in message
news:1143063792.961083.292800@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

MZB wrote:
OK, we bought a new house. I'm trying to sell my current house. We have
owned it for 30 years (strictly our only residence).

Now, say I paid $38K and sell it for $138K. I understand there is no tax
liability. Fine.

But suppose I can't sell my house now but I can rent it. Say I rent it
for 1
or 2 years and then sell it. Will there be a tax problem when I sell.
Also,
do I now get to take some deductions? If so, then I guess the rent
becomes
income??? Obviously, I have no experience in this area!!



In order to qualify for the gain exclusion (IRC Sec. 121), you must
have owned and lived in the house as your principal residence for at
least two of the five years immediately preceding the sale. So if you
keep it and rent it out for more than two years, the gain on the sale
will be taxable.

If you decide to rent the property for some period of time, you will
need to consult a tax professional to get things set up properly. The
rent will be taxable income to you, and you will be able to deduct
expenses such as depreciation, repairs and maintenance, mortgage
interest, real estate taxes, etc.

Katie in San Diego

The foregoing is intended for educational purposes only and does not
constitute legal or professional advice. Nothing contained herein is
intended to be used, or can be used, by any person to avoid penalties
that may be imposed under federal or any state law.



.

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