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Posted by Mark Bole on October 4, 2008, 4:02 pm
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Alex M wrote:
> Hi,
> Will really appreciate any advice on the following situation.
>
> Owned a house for last 10 years and I have in access of 250K gains. I
> have been renting this house since Jan 2007 and before that it was my
> primary residence. If continue to rent the property till April 2009 and
> sell this house in April 2009, how will my 250K deduction on home sale gains
> will be impacted. Please share your wisdom
> thanks
> VJ-
The new rule should not change your situation at all. In a nutshell, if
you meet the Section 121 gain exclusion rules from time of purchase up
through the most recent two years, you can convert to a rental for up to
three additional years beyond that and still use the full exclusion.
What you can no longer do is rent out a property for a long time, then
move into it for the last two years before sale and use the full
exclusion based on those last two years.
I'm leaving out a lot of details, such as pre-2009 "grandfathered" use,
the proration calculation, and so on.
Also, don't forget that gain due to depreciation allowed (or allowable)
since you converted to a rental continues to be not excludable.
-Mark Bole
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