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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16579
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I plan on selling my current primary residence of 18 years

Customer Question

I plan on selling my current primary residence of 18 years and clain the 250,000 capital gains exemption. I then plan to move into my current 1031 like kind exchange now vacant rental property and live there for two years or more. Will I now have to pay capital gains taxes on the 1031property? (basis started at 64K and through a series of rentals the property is estimated at about 320K). Will I be able to claim the capital gains exemption on this property after two years since it will be my new primaryresidence?
Submitted: 4 years ago.
Category: Tax
Expert:  Megan C replied 4 years ago.
Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

Thank you for your question. If you live in your new primary residence for 2 of the 5 year period before you sell the property, you will be able to exclude the capital gain on that as well. However, you would have to recapture any depreciation you deducted as you had it as a rental.

CLICK HERE for IRS guidance on this topic.

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Expert:  Megan C replied 4 years ago.
I meant to add something else. You're going to have to allocate your qualified vs non-qualified use of the 1031 property if you don't live in it for the full 5 year period after you move in. CLICK HERE for an article on how you would calculate this.
Expert:  Megan C replied 4 years ago.
I see that you noted our service as bad. What can we do to make you a satisfied customer?

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