Quote:
Originally Posted by FalconheadWest
This statement is incorrect. You just need to live it in as primary residence for 2 out of 5 years, not "every 5 years". That means, if you have it as a rental for 10 years, then you can move into the house for 2 years and avoid capital gains. You can have it as a rental for 25 years and avoid capital gains by moving into the house for 2 years before you sell it...
But with those examples, after you live in it for 2 years, you can then rent it out again for 3 years (I would do 2 1/2 so you don't go over the time limit) and still avoid capital gains because you lived in it for 2 of the last 5 years.
|
Quote:
Originally Posted by FalconheadWest
I'm not going to argue it, because I'm not an expert in tax law, but I'll just say that over and over again in classes I take, they always say as long as you live there for at least 2 years of the past 5, you're exempt. At the closing table with sellers, when they're signing the form, the question in black and white that you check yes or no to is asking if you've lived in the house 2 of the past 5 years. If you check yes, that's all the paperwork that is filed by the title company when you sell. There is no question of "How long was it a rental?" Just sayin'...
|
Having it told over and over again in classes doesn't make it right. Laws change. It has been posted in this forum over and over even with links to the IRS documents in plain black and white with clear examples yet real estate professional refuse to either understand or continue to lie. The tax exemption is a selling tool currently used by real estate professional and it is understandable why they pick and choose what they want as the truth.
When you check yes on that 2 of the past 5 years document , it has to do with escrow/title withholding and not actual taxes dues come tax time. It is explaining why the closing agent isn't holding 3% or whatever of the proceeds for taxes. I'm not a tax professional but the document really isn't that hard to understand.