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Ask Barrister Your Own Question
Barrister
Barrister, Lawyer
Category: Real Estate Law
Satisfied Customers: 33781
Experience:  15 years real estate, Realtor. Landlord 26 years
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I want to take advantage of the capital gain tax exclusion

Customer Question

I want to take advantage of the capital gain tax exclusion for my current home I have lived in for 10 years (about 100K capitol gain). But I would like to keep the property as a rental when I move into a new home I just purchased.
JA: Because real estate law varies from place to place, can you tell me what state this is in?
Customer: Arizona
JA: Has any paperwork been filed?
Customer: no
JA: Anything else you want the lawyer to know before I connect you?
Customer: How can I do both?
Submitted: 21 days ago.
Category: Real Estate Law
Expert:  Barrister replied 21 days ago.

Hello and welcome! My name is ***** ***** I am a licensed attorney who will try my very best to help with your situation or get you to someone who can. There may be a slight delay in my responses as I research statutes or ordinances and type out an answer or reply, but rest assured, I am working on your question.

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You only get the capital gains tax homestead exemption if you actually sell a property after living in it for 2 of the last 5 years. So if you keep it as a rental, you lose that exemption if you don't sell within 3 years of moving out.

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So you can't do both. You either sell and put the $100K in your pocket tax free or you keep it, rent it out, and then depreciate it over a 27.5 year depreciable schedule while earning income from the rents.

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As an aside, in addition to being an attorney, I have also been a landlord for over 26 years and a licensed Realtor for 14...

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thanks

Barrister

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