Primary/Rental home sale

Forum|Forum|3 years ago
June 8, 2023
2 replies
31 views

Hi,

I have a client getting ready to sell a home that she partially lived in and rented out. She lived in the basement for the last 5 years and rented the upstairs portion at the same time. They shared the utilities but had two different entrances. Do you think she can take the full $250,000 exclusion or does she need to exclude the top half since she did not live in it? I was a little confused by the examples in publication 523 so thought I might ask.

Thanks

ProSeries Professional

This topic has been closed for replies.

Best answer by Accountant-Man

She can only exclude up to 30% of the gain.

sjrcpa

Level 15

Gain attributable to the top half is taxable since she did not live in it for 2 out of the 5 years prior to sale.

The more I know the more I don’t know.

BobKamman

Level 15

Give us some more facts and circumstances. Is the land itself worth $1 million and the replacement cost of the improvements only $100K? Does it have two kitchens? How many bathrooms? Garage, carport, driveway? Was tenant a relative? Was she filing Schedule E and claiming depreciation on, what percentage of basis?

A

Avs19Author

Level 6

The land is probably worth around 50K. No improvement costs. I believe it's set up as two living units. Which means it's own kitchen and bathrooms. Tenant is not related. She was filing a schedule E and depreciating the upstairs portion. 70% of the house is upstairs.

I know that duplexes are split and maybe this falls into the same category but am not 100%.

Thanks!

Accountant-ManAnswer

Level 13

She can only exclude up to 30% of the gain.

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