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Primary residence, turned into rental, now sold
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Susan
Jul 15, 2016, 6:14:48 PM7/15/16
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This is a 2015 tax question, just now working on it (filed extension).
I bought my first home in 1994, paid 80k and spent 30k in improvements over the years. In August, 2012 I bought a new home for 360k and turned my old one into rental property with a basis of 110k. In March of 2015 I sold the rental for 150k and also sold my new home for 350k the following month (I now live with my sister). I now have about 40k (not counting depreciation) of gain on my first primary residence that I turned into rental, and 10k loss on my latest primary residence. Have I lost the ability to exclude the first 250k in gain for single persons on this rental, even though at time of sale I had lived in it for 2 of the preceding 5 years? Thanks for help!
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I bought my first home in 1994, paid 80k and spent 30k in improvements over the years. In August, 2012 I bought a new home for 360k and turned my old one into rental property with a basis of 110k. In March of 2015 I sold the rental for 150k and also sold my new home for 350k the following month (I now live with my sister). I now have about 40k (not counting depreciation) of gain on my first primary residence that I turned into rental, and 10k loss on my latest primary residence. Have I lost the ability to exclude the first 250k in gain for single persons on this rental, even though at time of sale I had lived in it for 2 of the preceding 5 years? Thanks for help!
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
ira smilovitz
Jul 15, 2016, 11:12:35 PM7/15/16
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On Friday, July 15, 2016 at 6:14:48 PM UTC-4, Susan wrote:
> This is a 2015 tax question, just now working on it (filed extension).
> I bought my first home in 1994, paid 80k and spent 30k in improvements over the years. In August, 2012 I bought a new home for 360k and turned my old one into rental property with a basis of 110k. In March of 2015 I sold the rental for 150k and also sold my new home for 350k the following month (I now live with my sister). I now have about 40k (not counting depreciation) of gain on my first primary residence that I turned into rental, and 10k loss on my latest primary residence. Have I lost the ability to exclude the first 250k in gain for single persons on this rental, even though at time of sale I had lived in it for 2 of the preceding 5 years? Thanks for help!
>
> --
No. Your capital gain on the sale of the rental property is still eligible for Sec. 121 gain. You will also be subject to tax on the any recapture of depreciation. Your loss on the sale of the replacement residence is non-deductible and cannot be used to offset any of the gain from the first property.
> This is a 2015 tax question, just now working on it (filed extension).
> I bought my first home in 1994, paid 80k and spent 30k in improvements over the years. In August, 2012 I bought a new home for 360k and turned my old one into rental property with a basis of 110k. In March of 2015 I sold the rental for 150k and also sold my new home for 350k the following month (I now live with my sister). I now have about 40k (not counting depreciation) of gain on my first primary residence that I turned into rental, and 10k loss on my latest primary residence. Have I lost the ability to exclude the first 250k in gain for single persons on this rental, even though at time of sale I had lived in it for 2 of the preceding 5 years? Thanks for help!
>
> --
Ira Smilovitz
Arthur Rubin
Jul 19, 2016, 2:47:45 PM7/19/16
to
On Friday, July 15, 2016 at 3:14:48 PM UTC-7, Susan wrote:
> This is a 2015 tax question, just now working on it (filed extension).
> I bought my first home in 1994, paid 80k and spent 30k in improvements over the years. In August, 2012 I bought a new home for 360k and turned my old one into rental property with a basis of 110k. In March of 2015 I sold the rental for 150k and also sold my new home for 350k the following month (I now live with my sister). I now have about 40k (not counting depreciation) of gain on my first primary residence that I turned into rental, and 10k loss on my latest primary residence. Have I lost the ability to exclude the first 250k in gain for single persons on this rental, even though at time of sale I had lived in it for 2 of the preceding 5 years? Thanks for help!
In addition to the depreciation being recovered, as Ira noted, approximately 1/4 of the gain is not excludible, the ratio being the number of days (since 2009) in which you owned but did not live in the house, divided by the total number of days you owned the house.
> This is a 2015 tax question, just now working on it (filed extension).
> I bought my first home in 1994, paid 80k and spent 30k in improvements over the years. In August, 2012 I bought a new home for 360k and turned my old one into rental property with a basis of 110k. In March of 2015 I sold the rental for 150k and also sold my new home for 350k the following month (I now live with my sister). I now have about 40k (not counting depreciation) of gain on my first primary residence that I turned into rental, and 10k loss on my latest primary residence. Have I lost the ability to exclude the first 250k in gain for single persons on this rental, even though at time of sale I had lived in it for 2 of the preceding 5 years? Thanks for help!
--
Arthur Rubin, AFSP, CRTP, in Brea, CA
Beth Parziale, EA
Jul 26, 2016, 1:16:06 PM7/26/16
to
On Friday, July 15, 2016 at 6:14:48 PM UTC-4, Susan wrote:
> This is a 2015 tax question, just now working on it (filed extension).
> I bought my first home in 1994, paid 80k and spent 30k in improvements over the years. In August, 2012 I bought a new home for 360k and turned my old one into rental property with a basis of 110k. In March of 2015 I sold the rental for 150k and also sold my new home for 350k the following month (I now live with my sister). I now have about 40k (not counting depreciation) of gain on my first primary residence that I turned into rental, and 10k loss on my latest primary residence. Have I lost the ability to exclude the first 250k in gain for single persons on this rental, even though at time of sale I had lived in it for 2 of the preceding 5 years? Thanks for help!
Susan,
> I bought my first home in 1994, paid 80k and spent 30k in improvements over the years. In August, 2012 I bought a new home for 360k and turned my old one into rental property with a basis of 110k. In March of 2015 I sold the rental for 150k and also sold my new home for 350k the following month (I now live with my sister). I now have about 40k (not counting depreciation) of gain on my first primary residence that I turned into rental, and 10k loss on my latest primary residence. Have I lost the ability to exclude the first 250k in gain for single persons on this rental, even though at time of sale I had lived in it for 2 of the preceding 5 years? Thanks for help!
The deductions you have taken (or were allowed to take, but didn't) for depreciation will be subject to tax as recaptured depreciation.
You are eligible for the full Section 121 exclusion because although you have "nonqualified use," it will not be included in any calculation because of the exception states the period after the home was last used as the principal residence but before the date of sale is not included as nonqualified use. I wish I could write that in a more succinct way!
Your $10,000 loss on the other residence is a nondeductible personal loss.
Beth Parziale, EA
Taxed and Spent
Jul 26, 2016, 3:16:04 PM7/26/16
to
On 7/26/2016 9:40 AM, Beth Parziale, EA wrote:
> On Friday, July 15, 2016 at 6:14:48 PM UTC-4, Susan wrote:
>> This is a 2015 tax question, just now working on it (filed extension).
>> I bought my first home in 1994, paid 80k and spent 30k in improvements over the years. In August, 2012 I bought a new home for 360k and turned my old one into rental property with a basis of 110k. In March of 2015 I sold the rental for 150k and also sold my new home for 350k the following month (I now live with my sister). I now have about 40k (not counting depreciation) of gain on my first primary residence that I turned into rental, and 10k loss on my latest primary residence. Have I lost the ability to exclude the first 250k in gain for single persons on this rental, even though at time of sale I had lived in it for 2 of the preceding 5 years? Thanks for help!
>
> Susan,
>
> The deductions you have taken (or were allowed to take, but didn't) for depreciation will be subject to tax as recaptured depreciation.
I think you are remiss in not pointing out the solution to the failure
> On Friday, July 15, 2016 at 6:14:48 PM UTC-4, Susan wrote:
>> This is a 2015 tax question, just now working on it (filed extension).
>> I bought my first home in 1994, paid 80k and spent 30k in improvements over the years. In August, 2012 I bought a new home for 360k and turned my old one into rental property with a basis of 110k. In March of 2015 I sold the rental for 150k and also sold my new home for 350k the following month (I now live with my sister). I now have about 40k (not counting depreciation) of gain on my first primary residence that I turned into rental, and 10k loss on my latest primary residence. Have I lost the ability to exclude the first 250k in gain for single persons on this rental, even though at time of sale I had lived in it for 2 of the preceding 5 years? Thanks for help!
>
> Susan,
>
> The deductions you have taken (or were allowed to take, but didn't) for depreciation will be subject to tax as recaptured depreciation.
to take depreciation. Amended returns are one possibility, but are
there others?
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