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My mother is ninety and has had a rental for several years. She wants to sell it but wants to legally avoid having to pay the capital gain tax. Currently she resides in an assisted living facility. She doesn't consider herself a permanent resident there and always talks of returning to her primary residence. Can she legally declare her rental as the new primary residence she intends to return to in two years and then sell as her residence?
If she moves into the house and receives mail there and has utilities on, probably in her name, then of course it becomes a primary residence and she can sell as a primary residence. If she's trying to declare it a primary residence on paper only, good luck the feds don't figure that one out as you posted it on a public forum...
Isn't the criteria for primary residency (as far as capital gains is concerned) where you are registered to vote and have automobile insurance(if any). Also it only has to have been your primary for 2 of the last 5 years to not have to pay capital gains on it.
Any tax accountants out there to clarify as this is more a tax question than real estate.
If she moves into the house and receives mail there and has utilities on, probably in her name, then of course it becomes a primary residence and she can sell as a primary residence. If she's trying to declare it a primary residence on paper only, good luck the feds don't figure that one out as you posted it on a public forum...
You think the feds pay $60/hr for someone full time to watch over the entire internet looking for people trying to wrongly take the primary housing exemption(homestead)?
She'll pay 5% on the PROFIT (sale price minus (original price + selling fees)) of the house sale if she has owned it for long than one year. So calculate that out to see how much it will actually be.
The intention to use it as a primary residence doesn't matter. Physically occupying it as one's primary residence is what matters.
Just so you know, it is more complicated than what is presented. As an example, the depreciated amount must be recaptured. I suggest you do some reading rather than asking an open forum or maybe spend some money on a real estate tax attorney.
i agree its vey complex ,as of may 1997 all depreciation taken prior to that date is forgiven when converting a rental to a primary.
Can you give a link to discussion about this? I assume you are referring to the 1997 Tax Payer's Relief Act? Can't find any reference to depreciation forgiveness.
Location: When you take flak it means you are on target
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Quote:
Originally Posted by jdm2008
You think the feds pay $60/hr for someone full time to watch over the entire internet looking for people trying to wrongly take the primary housing exemption(homestead)?
Yes, they probably do. That is why the country is bankrupt, because some 92 year old might get over on them for once in their life.
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