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Stephen G.
Stephen G., Financial Advisor
Category: Capital Gains and Losses
Satisfied Customers: 7194
Experience:  Senior Tax Expert; CPA/PFS(retired)Personal Financial Planner; Small Business & Professional Mergers & Acquisitions
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We wouldn't have any depreciation recap or Capitol gains on

Customer Question

We wouldn't have any depreciation recap or Capitol gains on this rental we've had for 10 years? If he sells the property and buys a new one for more he wouldn't have gains either correct? If he lives in the property for 2 years and owns it for 5 will he get the 250,000 exemption?
Submitted: 1 year ago.
Category: Capital Gains and Losses
Expert:  Stephen G. replied 1 year ago.
Before I start answering additional questions, which I am happy to do, we need to complete the last question, which is done by rating my response. Without that I do not receive my share of the payment for that question.
Expert:  Stephen G. replied 1 year ago.
Thanks for rating the previous question; I didn't receive a message that you had done that.As I had indicated, there's no capital gains realized on a gift.As far as your son selling the property and buying a another one for greater than the amount he sells the one he's going to receive from you; that's called a Section 1031 exchange.The rules with respect to 1031 exchanges require close adherence to specific regulations which do not allow for exceptions; the most important regulation is that the seller can't handle the money; they must engage an independent "Qualified Intermediary" to handle the exchange. If this becomes something that your son is considering; then before he engages in any part of the transaction, the planning needs to take place up front.Now as far as the $250,000 Primary Residence Exclusion is concerned, the rule is that you must own & occupy the residence for 2 out of the preceding 5 years ending on the date of sale. (You don't have to own the property for 5 years). Also, any capital gain from the depreciation claimed on the property while it was rental property is not eligible for the exclusion so that portion of the gain would be taxable when the property was sold.Thanks very much for using & I would be pleased to answer any follow-up questions you may have.Steve G.