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Posted by sftydvr@juno.com on April 23, 2006, 3:13 am
Please log in for more thread options Mike Walsh wrote:
> My wife and I are considering selling a beach house we have
> owned for 4 years. In that time it has appreciated a fair
> amount so we'd like to minimize the tax implications to the
> extent possible. As I understand it, if we simply sell it
> and don't buy another property, we will have to pay taxes on
> the gains. At this time I don't believe we will purchase
> another property but if we did, it probably not be a rental
> property.
>
> What I'd really like to do is apply the proceeds to our
> primary residence as it is an older home which needs a fair
> amout of renovation as well as an addition. Is there any
> way to do this? We currently account for the beach house as
> a rental property and not a second home (schedule E). If it
> were a second home, would we be able to do what I'd like to
> do? How long does a rental home have to be off the market
> as a rental before it can be considered a second home?
To achieve your stated objectives, I can see one way. Move
into the beach home and make it your primary residence for
two years, perhaps while starting the remodel on the other
property. Then sell the beach home and take the half mil
exclusion (and pay off construction loans?).
Making the beach home your second home doesn't do anything
for you.
BC
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