4 years ago I purchased the home I lived in prior to joining the military 10 years ago. Since purchasing I have rented it out and am considering selling it. I plan on speaking to a CPA about this but would I be required to pay capital gains tax? I understand that there is an exclusion for us that is extended to 15 years although I did not own the home at that time. I would think this may make me ineligible. I appreciate any insight. For context, I am active duty, have been in for 10 years, purchased the home 4 years ago, and lived in the home my whole life until joining. Thanks!
Rental Property and Capital Gains
byu/Po1ntyHe4d inMilitaryFinance
Posted by Po1ntyHe4d
2 Comments
I don’t think you’re going to qualify for the exemption. Technically you’ve never lived in it while owning it. Your lived in time was as a tenant. Usually there is a purchase date and lived in time line – the lived in I believe has to be after the purchase date. Your best bet is to actually read the IRS requirements as I’ve known it as you PCS to post X, buy, live in the home for 2-3 years, and get PCS orders to post Y, make the home a rental, and have the 15 year rule.
It’s 2 of the last 5 years. It sounds like you were there for 1 of last 5 years so you may be able to take 50% of $250k exclusion. Double check with cpa