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Can we move into our rental property, live there as our main home for two years, and sell it without having to pay tax on the capital gain?

Asked by Trulia Brooklyn, Brooklyn, NY Thu Feb 28, 2013

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Luca and Alisa Adriani’s answer
Moving into your rental home is always possible, but in terms of not having to pay capital gains by living in the home for 2 years is only possible with your primary (personal) residence. You would have to declare your rental home as your primary and then live in it for 2 years to forgo any capital gains. Unfortunately there is no way around living in a rental for 2 years and then not having to pay capital gains. Uncle Sam wants his cut. That is why we can only have one primary residence.
1 vote Thank Flag Link Thu Feb 28, 2013
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Yes, as long as you can prove to the IRS that it has become your primary residence. The thing it that if your profit is too large you may still have to pay capital gains tax. Remember, a married couple gets a $500,000 exemption and a single individual gets a $250,000 exemption. If the profit respectively is more that $500,000 or $250,000, you will still have to pay capital gains on the remainder of the profit. Having said that, there are other ways to write off capital gains depending on how you claim your taxes. Speak to your accountant to get the correct answer.

Sincerely,
Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, Inc.
Office: (718) 645-1665/ Cell: (917) 805-0783
Email: MitchellSFeldman@aol.com
0 votes Thank Flag Link Thu Feb 28, 2013
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