To Sell a rental property?

[JBurkett19]

I have a rental property that I used to live in, but moved out in March of 2009. I think that I qulaify for the exemption from Capital Gains because I lived in it two of the last five years. After this year, I will not qualify for the Cap. Gains exemtion, so I was wondering if anyone had an opinion on whether or not I should sell to avoid the Cap. Gains. Also, if I’m to pay Cap. Gains, am I also on the hook for income tax on any gains?

General back ground is: I have a monthly cash flow of about $150 per month after expenses (including Mort./ Prop tax./ Ins./ Income Tax and savings for repairs). The house has recently become vacant and I’m prepping it for re-rental, but wanted to confront this question now.

[(former)FormerSanDiegan]

It depends.

How much would you realize from the sale ?

How much would be taxable if you weren’t eligible for some tax-free gain ? (you need to know your adjusted cost basis)

How much (approximately) is the property worth and how much rent do you charge ?

What would be your plans for the proceeds ?

[(former)FormerSanDiegan]

It depends.

How much would you realize from the sale ?

How much would be taxable if you weren’t eligible for some tax-free gain ? (you need to know your adjusted cost basis)

How much (approximately) is the property worth and how much rent do you charge ?

What would be your plans for the proceeds ?

[(former)FormerSanDiegan]

It depends.

How much would you realize from the sale ?

How much would be taxable if you weren’t eligible for some tax-free gain ? (you need to know your adjusted cost basis)

How much (approximately) is the property worth and how much rent do you charge ?

What would be your plans for the proceeds ?

[(former)FormerSanDiegan]

It depends.

How much would you realize from the sale ?

How much would be taxable if you weren’t eligible for some tax-free gain ? (you need to know your adjusted cost basis)

How much (approximately) is the property worth and how much rent do you charge ?

What would be your plans for the proceeds ?

[(former)FormerSanDiegan]

It depends.

How much would you realize from the sale ?

How much would be taxable if you weren’t eligible for some tax-free gain ? (you need to know your adjusted cost basis)

How much (approximately) is the property worth and how much rent do you charge ?

What would be your plans for the proceeds ?

[urbanrealtor]

I used to be a 1031 consultant for Prudential 1031 (aka 1031 Exchange Advantage).

I don’t know the answer to your question.
If I were you, I would speak with a 1031 person because the laws changed on this topic in the last couple of years.
If you talk to a CPA or EA, make sure they have very complete and up to date knowledge regarding 121 exemptions vs 1031 exemptions.
It has been my experience that most tax pros do not.

Also, look up on line about 121 exemptions.

Good luck.

[urbanrealtor]

I used to be a 1031 consultant for Prudential 1031 (aka 1031 Exchange Advantage).

I don’t know the answer to your question.
If I were you, I would speak with a 1031 person because the laws changed on this topic in the last couple of years.
If you talk to a CPA or EA, make sure they have very complete and up to date knowledge regarding 121 exemptions vs 1031 exemptions.
It has been my experience that most tax pros do not.

Also, look up on line about 121 exemptions.

Good luck.

[urbanrealtor]

I used to be a 1031 consultant for Prudential 1031 (aka 1031 Exchange Advantage).

I don’t know the answer to your question.
If I were you, I would speak with a 1031 person because the laws changed on this topic in the last couple of years.
If you talk to a CPA or EA, make sure they have very complete and up to date knowledge regarding 121 exemptions vs 1031 exemptions.
It has been my experience that most tax pros do not.

Also, look up on line about 121 exemptions.

Good luck.

[urbanrealtor]

I used to be a 1031 consultant for Prudential 1031 (aka 1031 Exchange Advantage).

I don’t know the answer to your question.
If I were you, I would speak with a 1031 person because the laws changed on this topic in the last couple of years.
If you talk to a CPA or EA, make sure they have very complete and up to date knowledge regarding 121 exemptions vs 1031 exemptions.
It has been my experience that most tax pros do not.

Also, look up on line about 121 exemptions.

Good luck.

[urbanrealtor]

I used to be a 1031 consultant for Prudential 1031 (aka 1031 Exchange Advantage).

I don’t know the answer to your question.
If I were you, I would speak with a 1031 person because the laws changed on this topic in the last couple of years.
If you talk to a CPA or EA, make sure they have very complete and up to date knowledge regarding 121 exemptions vs 1031 exemptions.
It has been my experience that most tax pros do not.

Also, look up on line about 121 exemptions.

Good luck.

[(former)FormerSanDiegan]

UR is correct, the laws did change. A portion of your gain will be tax-free, but a prorated portion will be taxable, depending on the period used as a rental.

The portion of the profit that’s subject to tax is based on the ratio of the time after 31 December 2008 when the house was a second home or a rental unit, to the total time you owned it.

Also, it may have to be your primary residence when you sell it (e.g. you move back in).

Take UR’s recommendation. Consult a tax advisor, but don;t take their word for it. Research it yourself also. But there’s lots of stale info on the web that does not account for recent tax law changes. Confirm any advice with IRS publications.

[(former)FormerSanDiegan]

UR is correct, the laws did change. A portion of your gain will be tax-free, but a prorated portion will be taxable, depending on the period used as a rental.

The portion of the profit that’s subject to tax is based on the ratio of the time after 31 December 2008 when the house was a second home or a rental unit, to the total time you owned it.

Also, it may have to be your primary residence when you sell it (e.g. you move back in).

Take UR’s recommendation. Consult a tax advisor, but don;t take their word for it. Research it yourself also. But there’s lots of stale info on the web that does not account for recent tax law changes. Confirm any advice with IRS publications.

[(former)FormerSanDiegan]

UR is correct, the laws did change. A portion of your gain will be tax-free, but a prorated portion will be taxable, depending on the period used as a rental.

The portion of the profit that’s subject to tax is based on the ratio of the time after 31 December 2008 when the house was a second home or a rental unit, to the total time you owned it.

Also, it may have to be your primary residence when you sell it (e.g. you move back in).

Take UR’s recommendation. Consult a tax advisor, but don;t take their word for it. Research it yourself also. But there’s lots of stale info on the web that does not account for recent tax law changes. Confirm any advice with IRS publications.

[(former)FormerSanDiegan]

UR is correct, the laws did change. A portion of your gain will be tax-free, but a prorated portion will be taxable, depending on the period used as a rental.

The portion of the profit that’s subject to tax is based on the ratio of the time after 31 December 2008 when the house was a second home or a rental unit, to the total time you owned it.

Also, it may have to be your primary residence when you sell it (e.g. you move back in).

Take UR’s recommendation. Consult a tax advisor, but don;t take their word for it. Research it yourself also. But there’s lots of stale info on the web that does not account for recent tax law changes. Confirm any advice with IRS publications.

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