[kimreniska@mac.com]

Topic No. 409, Capital Gains and Losses | Internal Revenue Service

[westernrider75]

Originally Posted by melpetezrinski

You will only pay capital gains at the federal level, since there is no state tax in Florida. If you lived in the home for 2 years, you would be exempt from those capital gains up to $250k for single, $500k for married. Yes, add every expense you can to increase the cost of the home, which reduces your profit and capital gains.

Is that a “one-time” exemption or can that be used more than once?

[JanaR]

Hi,
If you live in that property for 2 years, you can make up to $250,000 as a single person or $500,000 as a married couple without paying capital gains. If you were to sell that property and buy another rental property, you could do a 1031 which is a way to defer the taxes until you sell that one. It has to be like kind property equal to or greater than the one you would sell. If you are wanting to sell that and buy a permanent home for yourself, you need to live there 2 years. I hope that helps. You can contact me for any additional info.
Warm Regards,
Jana Raber
Realty Executives In The Villages
812-499-9571
check out my Youtube videos @ Jana Raber

[bowlingal]

speak with an accountant to be sure. Do not take advice on something so important on here

[retiredguy123]

Originally Posted by westernrider75

Is that a “one-time” exemption or can that be used more than once?

You can do it more than once. There is no limit.

[cjky2k]

Originally Posted by asianthree

I would advise you to speak to your CPA instead of the guessing game with zero knowledge of your taxes

100% agree. And since you haven’t sold in 2023, it will be a 2034 tax event anyway - not 2023. However, if you want to “play around” OR if you prepared your taxes yourself, you can us TurboTax (and I would assume other tax prep software) to run scenarios. It won’t be precise but should be directionally correct and you will have to “pretend” you sold in December 2023.

All that said, assuming you rented it all “above board”, a CPA is the best and safest way to go. Without question.

Last thought - if you declared residency here earlier this year, could you not live in the CV for two years from that date and thus make it your primary residence??

Good luck. Get a professional’s help. PS i had rental properties in the past that turned into a permanent residence. It’s tricky. Peace of mind that the IRS won’t be sending you any letters is worth a fair amount in my book!!!

[Sully]

If this was an income property, not primary and you intend to sell then buy another income property, look into1031 exchange. Timing is critical though, you only have like 45 days to make this happen. Then, the tax can be deferred until a later date when you realize the gains. Essentially, you're kicking the can down the road on the tax but you can make money on the money in the interim.

[RICH1]

BINGO , you nailed it ...

[RICH1]

Originally Posted by manaboutown

check with a cpa, especially if you depreciated the property while it was rented and expensed or capitalized various costs.

you nailed it ....,

[sowilts]

Why not talk to the Tax Lady at your tax office.

[PipeDream]

We did not have to pay NY taxes on property purchased in a 1035 exchange because we were residents of Florida for over one year at the time of the sale. Sweet.

[Gvdvn]

If you have not completed a sale yet there is the possibility not trading the house for a different property. It gets complicated and must all close together. It has been a long time since I have heard of this but in past I know of a transaction to trade an apartment building in California for 6 houses in Missouri all closing in a deal. Of course the it was all separate and just closed swapping money.

[FredJacobs]

The information in this reply is correct. You must have lived in the house for at least two of the last 5 years to get the FULL exclusion of $250K or $500K to reduce the capital gains tax. You can further reduce the capital gain by adding the costs of preparing the house for sale. This would include adding major appliances, repairs, new landscaping, painting, etc. One more thing - The tax forms do allow for some pro-rating of the exclusion if you cannot meet the full two years. The tax form calls for the dates of during which you actually occupied the house.

By the way, if you used Schedule E to pay tax on the rental income and took depreciation, your return becomes a lot more complicated - there are extra forms to be filed - Sale of a business asset, depreciation adds to your profit, etc.

I recommend that you have your return prepared by a professional. I am pretty sure that your return would be "out of scope" for the AARP's Tax-Aide folks.

[Wondering]

My understanding, for IRS, is if the house you are buying cost more than the house you sold there is no capital gains jeopardy. I would think Florida tax would be the same.

[kingofbeer]

I assume that you reported the rental income and rental expenses. Keep good records and check with a CPA.