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Jason M. Tyra, CPA
Jason M. Tyra, CPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 177
Experience:  Principal at Jason M. Tyra, CPA, PLLC
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I am needing to sell my rental property, but do not own

Customer Question

I am needing to sell my rental property, but do not own another property (relocation for work over the past 8 years). We do not plan on buying another rental property, but want to buy the home we are living in now. Will I be hit with capital gains taxes if I use the money made from selling the house to buy a primary residence?
Submitted: 9 months ago.
Category: Tax
Expert:  Jason M. Tyra, CPA replied 9 months ago.

Hi Romina:

You can defer the gain on sale of business property by meeting the qualifications under Section 1031. This is commonly known as a "like-kind" exchange. However, rental property and personal use property are not considered like-kind, so this deferment would not be available in your situation. If you have a gain on the sale of your rental, then it would be a reportable capital gain unless you use the proceeds to buy another rental.

Customer: replied 9 months ago.
Thanks, ***** ***** What are the tax laws to no longer consider a property a rental versus a residence?
Expert:  Jason M. Tyra, CPA replied 9 months ago.

There isn't really a bright line rule here. If you had renters in the property right before it sold, then the IRS would likely consider it a rental. If you lived in the property for a while after renting, but before selling, then it might be considered personal use property.

Customer: replied 9 months ago.
Thank you. That is what I thought reading the rules, but wanted to get some confirmation. Thanks again.
Expert:  Jason M. Tyra, CPA replied 9 months ago.

No problem. Please let me know if there is anything else I can do for you and don't forget to rate.

Expert:  Jason M. Tyra, CPA replied 9 months ago.

Hi Romina:

Just a friendly reminder. Please don't forget to rate my response to your question. Rating is how I get credit for my answer.

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