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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29574
Experience:  Taxes, Immigration, Labor Relations
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I bought a primary home in Tucson, AZ in November of 2011.

Customer Question

I bought a primary home in Tucson, AZ in November of 2011. My company closed the local office and transferred me to Dallas, TX. I rented out my home since my transfer in July 2012. Now my job is transferring me to Casa Grande, AZ in June 2016. I want to sell the house in Tucson and buy a primary residence in Casa Grande. I will have lived in the Tucson house 8 months out of the last 4.5 years. I believe I will sell my home for 40k profit. Can I avoid capital gains taxes since my job required me to move? Or would I have to move back into the original home for two years?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.
How your home in Tucson, AZ was used after you moved out in July 2012?
Customer: replied 1 year ago.
I rented my home from July 2012-June 2016. It was claimed on my taxes and the home was depreciated.
Expert:  Lev replied 1 year ago.
Several issues...1.The property was converted to rental use - and that is classified as a rental property.Please be sure you correctly calculated the expected gain.The gain is calculated as (selling price) MINUS (adjusted basis) MINUS (selling expenses)Your basis is your original purchase price.It is adjusted by improvements (+) and depreciation (1) and some other items.2.Now in June 2016 the property was converted from rental to primary residence - is that correct?In the property is NOT converted - it is still a rental property - and you are selling a rental property.Exclusion would not be applied in this situation.3.If the property is converted to personal - you generally need to use it for two years in order to qualify for the exclusion.But you may qualify for the partial exclusion if you you selling your PRIMARY residence and the main reason is relocation due to job.However - you are relocating from Dallas, TX to Casa Grande, AZ - but the property in question is Tucson, AZ - and that property is not your primary residence - so that is NOT a sale of the primary home due to relocation....4.If you move into the property - and AFTER that you will be relocating to new work location - you would qualify for a partial exclusion,but even in this case - you would have non-qualified use (rental) - and exclusion is prorated.In additional - accumulated depreciation as a part of your gain may not be excluded here..I am afraid - based on your information - exclusion is not allowed - and your gain is taxable.Please be sure you correctly calculate the basis.Let me know if you need any help with that.