Level 4

Question

Non qualified use and the home sale exclusion

Forum|Forum|3 years ago
April 8, 2023
3 replies
31 views

When you sale a house that was both your residence and a rental during the time owned, can you actually qualify for full exclusion? What about the 1031 exchange, can you really EXCHANGE INTO YOUR DREAM HOME? Maybe I am a little tired or naïve, but I am pretty sure the non qualified states clearly-mixed use and what that really means is taxable gain on some of that transaction. Someone sometime has to pay the deferred taxes on the gain, and if you rent out your entire home 1046 days out 2927 days of ownership, you will get a partial exclusion not full one.

ProSeries Professional

This topic has been closed for replies.

qbteachmt

Level 15

"can you really EXCHANGE INTO YOUR DREAM HOME?"

Back before the late 1990s, when you sold your primary residence, you would buy a new one at the same or higher cost, to avoid needing to report and pay taxes on the gain from the sale.

That no longer applies.

Tax regulations change.

Don't yell at us; we're volunteers

T

taxes96786

Level 8

If used as personal residence for two of last 5 years of ownership the exclusion applies. If less than two years it may qualify of an allocation for personal time. 1031 is irrelevant

qbteachmt

Level 15

"1031 is irrelevant"

I would not call it irrelevant so much as "no longer applies." The question is a good question, but the concept is from 30 years ago. Someone is not staying current on the tax rules, or reading some bad guidance. The joke here is, don't take tax advice from the barbershop.

Don't yell at us; we're volunteers

T

taxes96786

Level 8

qtb you are reading into my post that which is not there. The question was about the exclusion amount...and to calculate this the 1031 is irrelevant.

T

TaxGuyBill

Level 15

@lburdickandassociates wrote:

can you actually qualify for full exclusion?

if you rent out your entire home 1046 days out 2927 days of ownership, you will get a partial exclusion not full one.

Maybe. What are the dates of rental and dates of personal?

L

lburdickandassociatesAuthor

Level 4

Literally something like this Bought end of 2013 days

2014-personal residence 365

2015-" " 365

2016 residence until 12-15-2016 349 16

2017rental all year 365

2018 " " 365

2019 moved back into around 10-30-2019 65 300

2020 personal residence 365

2021 " " 365

2022 " sold 02-22-2022 53

total 2973 1046

L

lburdickandassociatesAuthor

Level 4

and the part about 1031 exchange is not irrelevant. Same client was informed she could move into or live in one of the properties she received in 1031 exchange, within 2 years of the swap. I would love to get some feedback on a "flyer" the taxpayer provided me she received from an "exchange company". The scary part besides how much she will owe is how mislead she been about capital gains in regards to her sale of a house that had mixed use and thus would not get a full home sale exclusion.

Long time client will be bummed to see her go but after reading the flyer provided, I realized those are not the type of taxes my office prepares!!

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