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Dave CPA
Dave CPA, Accountant
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I bought a duplex in 12/04 and moved into one side 6/05, so

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I bought a duplex in 12/04 and moved into one side 6/05, so it became my primary residence. A relative always lived on the other side (for whatever that's worth). In February, 2010, it became necessary to move in with my parents to help take care of them. All along I believed that I would be free of capital gains tax if I had lived in it 2 of the last five years. Someone just told me that the day I rented it out, I lost that option. Is that correct?



Welcome to Just Answer,


That is NOT correct.


You may be able to exclude gain from the sale of a home you have used for business or to produce rental income if you meet the ownership and use test.


You just need to live there as a primary residence for 2 years during the five year period ending on the sale of the property.


The situation that you are in is demonstrated in the example on page 15 of the IRS publication 523 (bottom right hand side of the page).


Please let me know if you need further clarification.

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