Capital Gains Tax

Forum|Forum|7 years ago
August 17, 2018
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Had original home since 2004 and lived there. Bought new residence on July 22, 2015. Made the original one a rental home, but did not move to new house till early Sept. Were unable to rent the original house until Nov. 1, 2015. Closing date for sale of the original (now rental) home is 8-29-18. Do we have to pay cap. gains on it?

Carl11_2

Employee

You have to count days, starting from the closing date on the sale of the rental.

If you lived in the house as your *primary residence* for at least 2 of the last 5 years you owned it, then the first $250,000 of gain is tax free. ($500,000 if married filing joint and both of you lived in it for the required time)

So if you lived in the house as your primary residence for at least 731 days of the last 1826 days you owned it, counting backwards from the closing date of the sale, then you qualify for the capital gains tax exclusion.

There are other requirements too that you must meet. For example, one of those other requirements is that you must not have claimed this exemption before within the last two years.