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levr
levr, Tax Advisor
Category: Capital Gains and Losses
Satisfied Customers: 28944
Experience:  Working for a large tax preparation service
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We lived on this property yrs. It has a home and a shop. We

Customer Question

We lived on this property for 30 yrs. It has a home and a shop. We ran a trucking company out of the shop. We purchased another home and moved 4 yrs ago. We continued to use the shop for running our business but didn't live in the house. Now we have sold
the property, house, shop and business. Since we haven't lived in the house 2 out of 5 yrs. but continued to use the property for business is there any way we can take the sale of home deduction of $500000 before capital gains are owed.
Submitted: 1 year ago.
Category: Capital Gains and Losses
Expert:  levr replied 1 year ago.

The section 121 allows to exclude from taxable income teh gain on teh sale of a personal residence - up to $500k for married couples filing jointly.
That is NOT a deduction - but exclusion - when that gain is not added to the gross income.

Requirements for that exclusion is to own and used the property as a primary residence at least two out of last five years before the sale.
If you converted your home to business use - and that requirement is not satisfied - that exclusion is not allowed.

However - the gain woudl be taxed at reduced rate - for most people - that woudl be 15% because the property was owned more than a year.

Let me know if you need help to estimate your possible tax liability.

Unfortunately - based on your situation - exclusion is not available.

Sorry if you expected differently.

Expert:  levr replied 1 year ago.

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