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LawTalk, Attorney
Category: Real Estate Law
Satisfied Customers: 34884
Experience:  I have 30 years legal experience. Additionally, in CA I held a Real Estate Broker's license.
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My primary residence is in Massachusetts. I also own an apartment

Customer Question

My primary residence is in Massachusetts. I also own an apartment in Florida where I live over half of the time each year (FLA has no state income tax). So, to save on state income taxes, I'd like to change my primary residence to FLA.
I'd still live in my current MA house for the remaining months each year for about the next 10 years. By changing my primary residence to Florida I'd lose the advantage of the primary-residence home sale exclusion when I eventually sell the MA house to downsize to a smaller house there.
I'm looking to have my cake and eat it too; i.e. stop paying state income taxes and still get the primary home sale exclusion on my much-appreciated house in MA. I wish I could sell my MA property now, pay any taxes owed (after the $500K exclusion) and then buy it back immediately (probably a sham transaction). Anyway, that would salvage the $500K primary residence exclusion as well as significantly increasing the cost basis of my house in MA. Then when I sell the MA house in ten years hence I would have to pay tax on the full gain (I believe the MA house will not appreciate significantly above the new cost basis during the next ten years.)
Is there any legal way I could have my cake and eat it too?
Submitted: 5 months ago.
Category: Real Estate Law
Expert:  LawTalk replied 5 months ago.
Good afternoon,I'm Doug, and I'm sorry to hear of the confusion. My goal is to provide you with excellent service today. You will need to declare your Florida home as your primary residence, get a FL driver's license, register to vote there etc. Then at least 2 years before you want to sell the home in MA you will have to declare that as your primary residence, get a MA license etc. to make use of the capital gain tax exemption.You could legally sell the MA home to a friend who could in turn then sell it back to you to increase the basis of your home to the price that you buy it back for. It would have to be an above-board purchase with a real closing and the attendant costs associated with the sale. But it would be legal to do. You do risk that the "friend" will choose not to sell it back to you though. You may reply back to me using the Reply link and I will be happy to continue to assist you until I am able to address your concerns, to your satisfaction.I hope that I have been able to fully answer your question. As I am not an employee of JustAnswer, please be as kind as to rate my service to you. That is the only way I am compensated for assisting you. Thank you in advance.I wish you and yours the best in 2016,Doug

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