Did you turn your home into rental in Redlands, CA? Beware Tax Man

By
Services for Real Estate Pros with Healthcaretaxadvisor.scom 128305EA

The days when you could convert your rental property or vacation home to a principal residence in Redlands, CA or any other part of the country, and then use the full $250,000/$500,000 home-sale exclusion to avoid taxes are gone.

 

Here’s how the $250,000/$500,000 exclusion works today. You must divide your period of home ownership into two categories—qualified and nonqualified use:

 

  •              Qualified use means the time you or your spouse use the home as your principal residence.
  •              Nonqualified use means anytime January 1, 2009, or later in which neither you nor your spouse (or your former spouse) uses the property as a primary residence.

 

You allocate gain on the sale of your home between the periods of qualified and nonqualified use, and the gain allocated to nonqualified use doesn’t qualify for the $250,000/$500,000 home-sale exclusion.

You have one important exception to the nonqualified use definition: nonqualified use does not include rental use during the five-year period that’s after the last date you or your spouse used the property as your principal residence.

 

In other words, if you live in your principal residence for two years or more and then rent it out for three years or less, the rental period is not a “period of nonqualified use,” and you qualify for the $250,000/$500,000 home-sale exclusion.

 

If you have questions on your qualified and nonqualified use, please don’t hesitate to call me on my direct line at 909-570-1103 by email at Carlos@HealthcareTaxadvisor.com

Carlos Samaniego, EA
Enrolled Agent
Licensed by The Department of Treasury to represent taxpayers
Listen to my podcast on Anchor or your favorite podcast app – Click Here

1255 W Colton Ave, Redlands, CA 92374

Ph. (909)570-1103
Fax (909)586-9190

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
ActiveRain Community
Location:
California San Bernardino County Redlands

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainer
499,926
Dörte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear Carlos,

This is where a couple of months can make a difference.

Nov 06, 2018 06:50 AM #1
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
12,170

Carlos Samaniego EA

We help people with tax problems!
Ask me a question
*
*
*
*
Spam prevention