Landlord Question and Answer Forum

What are the rules on the sale of a rental property after 3 years? What If I needed to move into it as my permanent residence for a couple of years than sold it? What would the Capital Gains consequences be?

If you sell the rental property after 1 yr, your tax liability would be under the rules of long term capital gain (original purchase price + cap. improve – depreciation + sales expenses) based on your income. If you decide to move in for 2 yrs, you would owe no Fed taxes up to the amount of $250K per owner. -----Disclaimer: Since I’ve been answering a lot of questions, I thought I would make the following statement. I’m not affiliated with EZlandlord Forms. I’m just here (not sure how long) to help those that have questions. Having 40+ yrs with Rental Property and done well, it’s my way of “Pay it Forward (check out the movie).” However, it is up to you to become familiar with Fed/State/Local laws. I always like to know if the suggestions I offer are helpful. Feel free to comment anytime. Thanks in Advance. BTW...check out the Rental Property Organizer at Simp-List.com. Free Trial Download with data.

Posted by Bob R, CA on Wednesday, January 9, 2013

Thanks Bob, I am not a big time investor. This is my first rental property. It is a condo in the same complex I live in. I bought it in 2011 and it has been rented out since then. I am concerned about paying a bunch of tax dollars when I decide to sell, even if It is down the road.

Posted by rose w, CO on Wednesday, January 9, 2013

When you’re ready, decide which of the 2 units you want to live in after sales. If it’s the current unit, move into the rental for 2 years and than sell it to avoid Fed tax. Return to the current unit as your permanent residence. Also, if you decide to leave the complex, you could also sell the original residence and owe no tax as long as it was your permanent residence for 2 years in the last 5 years. Check with a tax professional before selling. . -----Disclaimer: Since I’ve been answering a lot of questions, I thought I would make the following statement. I’m not affiliated with EZlandlord Forms. I’m just here (not sure how long) to help those that have questions. Having 40+ yrs with Rental Property and done well, it’s my way of “Pay it Forward (check out the movie).” However, it is up to you to become familiar with Fed/State/Local laws. I always like to know if the suggestions I offer are helpful. Feel free to comment anytime. Thanks in Advance. BTW...check out the Rental Property Organizer at Simp-List.com. Free Trial Download with data.

Posted by Bob R, CA on Wednesday, January 9, 2013