personal home-rental home-personal again...tax exempt?


J

John/Charleston

I own two houses and am about to make it three. The first
one I bought in 1990 and lived in for 11 years and have been
renting it out for the last 4 years. I realize that I'm
beyond the live-in-it-for-two-of-the-last-five-years
exemption but what happens if I move back into it for two
years? Does my exemption become applicable again and does
it apply to the appreciation during the time while it was a
rental as well? There's probably about $120K
appreciation over the 15 years.

Also, is there a limit on how many times I can claim this
exemption? I've now lived in house #2 for 4 years. If I
rent it out for two years while I move back into house #1
for those two years, can I turn around and sell them both
on the same day and have the gains on both be tax free?

I'd be happy if someone could answer these questions or
point me to a source where these answers can be found in
layman's terms.

Thanks for all help,
John
 
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P

Phil Marti

John/Charleston said:
I own two houses and am about to make it three. The first
one I bought in 1990 and lived in for 11 years and have been
renting it out for the last 4 years. I realize that I'm
beyond the live-in-it-for-two-of-the-last-five-years
exemption but what happens if I move back into it for two
years? Does my exemption become applicable again
Yes

and does
it apply to the appreciation during the time while it was a
rental as well?
No.

There's probably about $120K
appreciation over the 15 years.

Also, is there a limit on how many times I can claim this
exemption? I've now lived in house #2 for 4 years. If I
rent it out for two years while I move back into house #1
for those two years, can I turn around and sell them both
on the same day and have the gains on both be tax free?
You can use the exemption only once every 2 years.
I'd be happy if someone could answer these questions or
point me to a source where these answers can be found in
layman's terms.
IRS Publications 523 and 527.
 
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J

John/Charleston

I get from reading the publications that the only part I
can't exclude is whatever amount I claimed as depreciation
during the rental years. this is different and probably less
than the property's appreciation as values are rising fast
where I am.

For example, if I claimed $2000 per year depreciation for 5
years before I moved back into the house then upon selling
it (after re-meeting use/occupancy requirements) I would
only have $10,000 that would be taxable on my gains. This
would apply even if the house's value appreciated $15,000
per year including during the years it was a rental. Do I
have that right?
You can use the exemption only once every 2 years.
Poo.
IRS Publications 523 and 527.
Thanks for your help Phil.
 

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