Level 5

Question

Sold AirBnb Lived in it for 2 year then rented it for 2 years Taxes?

Forum|Forum|1 year ago
October 31, 2024
4 replies
22 views

TP lived in the house for 2 years then did Airbnb for 2 1/2 years. Can the main home sale exclusion be taken?

Does the depreciation need to be recaptured?

Thanks,

ProSeries Professional

This topic has been closed for replies.

Just-Lisa-Now-

Intuit Community Champion

You may have some unqualified use to consider, yes depreciation will need to be recaptured, work through the Homesale worksheet, you can link it to the Asset Worksheet.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

Y

yeknodAuthor

Level 5

Lisa, thanks so much that really helped letting me know the home sales could be linked to the Dispositions portion of the asset.

Don

T

TaxGuyBill

Level 15

I'm going to nit-pick some things because of the way you phrased things:

Was it their "Principal Residence" while they lived in it?
Was it their Principal Residence from the time they bought the home until they converted to to rental use?
Was it AT LEAST two years (if they merely say "two years", you should get the actual dates)?

If the property was sold at a gain, yes, they will have "Unrecaptured Section 1250 Gain" due to the depreciation that was able to be taken.

Just-Lisa-Now-

Intuit Community Champion

Bill, does unqualified use some into play in this scenario? I struggle with this concept, when does it apply and when doesnt it?

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

T

TaxGuyBill

Level 15

No. If it was never their Principal Residence AFTER it was their non-principal residence, Nonqualified Use does not apply. Or to phrase it another way, if during their ownership the only time it was a non-principal residence was at the 'end' of their ownership, just treat it as normal (Nonqualified Use does not apply).

That is one of the reasons I asked if it was their Principal Residence from when they bought the home until it was converted to a rental (to check if it was ever NOT their Principal Residence, other than at the 'end').

Does that make sense?

[EDIT: The purpose of it was to prevent people from having a rental property then moving into it for two years to exclude all of the gain (besides the gain due to depreciation). That is why making it their Principal Residence AFTER triggers the Nonqualified Use.]

If it was their Principal Residence AFTER it was their non-principal residence, Nonqualified Use may apply. However, Military (up to 10 years) and Temporary Absences (up to 2 years) are also ways to get 'out' of Nonqualified Use, but are less common.

qbteachmt

Level 15

Okay, someone has to do it:

2 years + 2 1/2 years doesn't = 5 years ownership.

Don't yell at us; we're volunteers

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TaxGuyBill

Level 15

@qbteachmt wrote:

Okay, someone has to do it:

2 years + 2 1/2 years doesn't = 5 years ownership.

Huh? The OP never said anything about five years of ownership nor does five years of ownership have anything to do with the exclusion.

If you are referencing Lisa's comment about five years, that has nothing to do with the OP's 2 years plus 2.5 years.

Accountant-Man

Level 13

The same rules apply for the exclusion: did they own it and reside in it for 24 months within the last 60 months before sale. None of the months need to be consecutive.

DID THEY QUALIFY?

IE., bought and lived in it Jan 1, 2019 through December 31, 2020. 24 MONTHS

Moved out and rented it out Jan 1, 2021 through Jun 30, 2023. 30 MONTHS. Sold it July 1, 2023.

Owned it for 54 months.

DID THEY QUALIFY?

** I'm still a champion... of the world! Even without The Lounge.

Just-Lisa-Now-

Intuit Community Champion

@Accountant-Man wrote:

The same rules apply for the exclusion: did they own it and reside in it for 24 months within the last 60 months before sale. None of the months need to be consecutive.

DID THEY QUALIFY?

IE., bought and lived in it Jan 1, 2019 through December 31, 2020. 24 MONTHS

Moved out and rented it out Jan 1, 2021 through Jun 30, 2023. 30 MONTHS. Sold it July 1, 2023.

Owned it for 54 months.

DID THEY QUALIFY?

Yes, they owned and lived in it 24 months. My old employer had a guy back, he was a contractor. He'd buy a fixer upper, .live in it and fix it up and sell it right around the 3 year mark, got to use his exclusion each time since hed owned and lived in it for the 24 months.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

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