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


J

John/Charleston

This post didnt' seem to go thru so I'm trying again.
Sorry if repost...

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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C

Catherine White

John/Charleston said:
This post didnt' seem to go thru so I'm trying again.
Sorry if repost...

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.
Wouldn't that be nice, if you could do it. But you can't.
You can use the capital gains exclusion once every two
years. So, you can move back into house #1 for two years,
sell it, and exclude the allowed gain _except_ for the
depreciation you claimed (or could have claimed) while it
was rental property.

Then you can move back into house #2, and sell it two years
after you sell house #1, and exclude it's gain (again,
except for depreciation you _took or could have taken_ --
always a sting in the tail!).

Catherine
 

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