"Arthur L. Rubin" <ronnirubin[at]sprintmail.com> wrote:
- quote -

While you're picking nits, it is also, but only quite
rarely, 1825 days.

================================================== ==========
Moderator:
Since 2000 was a leap year, it's 1826 days until March 1st
and then it is 1827 for awhile.
================================================== ==========

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Roman Caesar wrote:

- quote -

Just to nit-pick: It's 730 days of the last 5 calendar
years, so it's 1826 or 1827 days....

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Roman Caesar <romeancaesar[at]yahoo.com> :

- quote -

True - but I would be careful about getting too close to
that 3-year limit before selling. Sometimes even booming
housing markets can dry up for a while, and suddenly that
quick sale you had counted on takes months to close even at
distress-sale prices. If you haven't thought about that
possibility and prepared a corresponding exit strategy, you
could get bit. Once you move out, the clock is ticking...

--
Dave Wallace (Remove NOSPAM from my address to email me)
It is quite humbling to realize that the storage occupied by the longest
line from a typical Usenet posting is sufficient to provide a state space
so vast that all the computation power in the world can not conquer it.

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smithff33[at]aol.com (Herb Smith) wrote:
- quote -

I absolutely did, long before. However my broker had a
personally negative experience before the 1997 and had to do
a 1031 exchange for her rental in Lake Arrowhead to live
here in Southern California and it was hard. I explained to
her since that I am not subject to the same problem. This
posting and various other research simply sought to show her
how her situation is not related at all to mine.

- quote -

That is right. I have personally read the IRS web-site
document and also talked with H&R Block. But you are not
required to live there the immediate preceeding 2 years
before you move out and you are not required not to rent the
property during the intervening 3 years (or any portion
thereof still allowing 730 of 1825 days prior to sale or
some lesser amount of days prior to sale as long as you
lived there for 730 of the last 1825.) You can rent it
during the intervening 3 years, etc. while it goes up in
value so you get the double-bonus of rental income and
property appreciation. This is a major thing in places like
Orange County, CA where the dearth of supply is completely
outstripped by a heavy demand.

The law as it currently stands is 2 of the last 5 years,
continuous not required, so the person who said 730 of the
last 1825 days was correct. Rental allowed, etc. 2 of last 5
is the key.

There are still many, many people who still don't know the
law change in 1997 that permits this and think that trade-up
is still required, or don't know the 2 of last 5 clause, or
don't know that you can do it every 2 years ad infinitum, or
don't know that you can rent out the home before you
exercise the 2 of last 5 clause, or that as long as the
property appreciation falls within the $250k single / $500k
married limits you do not have to report the home sale at
all on your taxes for the year of sale, etc., etc., etc.

It's a great tax break but does require effort (finding a
home that goes up in value rapidly), qualifying for it and
the major inconvenience of moving, finding renters, becoming
a landlord, etc. (though of course none of the rental aspect
above is required.)

ROMAN

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Herb Smith wrote:
- quote -

Note that the Tax Court interpretation isn't purely 730 days
of residency in the past 5 years (as demonstrated by that
recent case - the name escapes me for now - where the
taxpayers had 3 residences, in WI, AZ, and 1 elsewhere - and
the Court DENIED the exclusion despite the fact that there
was a count of 730+ days - because it interpreted the "2 of
5 years" differently).

Not only must a taxpayer have 730 days, he must also have
the majority of days in 2 of the 5 years for a given
residence to be considered PRIMARY - where multiple
residences are owned.

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harry_boscoe[at]hotmail.com (Harry Boscoe) wrote:
- quote -

It probably comes from the former rule that allowed deferral
of gain on the sale of a residence only if it was the
taxpayer's residence at the time of sale.

Stu

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edurall[at]aol.com (Ed Durall) wrote:

- quote -

Right, so far

If you want to get the full exclusion on the first
- quote -

NOT correct. As long as you sell the property WITHIN 3 years
of moving out, you can get the full exclusion. As long as
you lived there for 730 days in the last 5 years (before
sale) you qualify.

- quote -

You can take an exclusion for the second property, if you
wait two years from the sale of the first property (whenever
that is).

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Wayne Brasch wrote:

- quote -

There seems to be disagreement.

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Wayne Brasch <waynebrasch[at]stowetel.com> wrote:
- quote -

The S 121 rule is stated in terms of any 730 days of the
past 5 years, as your main home.

You could meet the rules by living there as your main home
for two years, moving out and renting for the next 3 years,
and selling at then end of that 3 years.

I think the point you are trying to make is you can't just
be living in the home, you have to be living in it as your
main home.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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"Wayne Brasch" <waynebrasch[at]stowetel.com> wrote:
- quote -

I'm curious where this notion comes from. The tax code says
nothing about living in the house "at the time of the sale."

Section 121 of the IRC:

Sec. 121. Exclusion of gain from sale of principal residence
(a) Exclusion
Gross income shall not include gain from the sale or
exchange of property if, during the 5-year period ending
on the date of the sale or exchange, such property has
been owned and used by the taxpayer as the taxpayer's
principal residence for periods aggregating 2 years or
more.

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"Wayne Brasch" <waynebrasch[at]stowetel.com> wrote:

- quote -

ABSOLUTELY WRONG - as long as you live there as your primary
residence for two of the five years BEFORE sale, you qualify
for the exclusion. Those days of occupancy do not have to be
at any particular time in the five years, or even a
continuous five year period.

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You should have asked these questions before you moved to
the other property.

The exclusion is available to you only if you owned and
lived in the property two of the five years preceeding the
sale. If you want to get the full exclusion on the first
property, you will have to move back into it and live there
for two more years. Then you can sell it and get the
exclusion.

You can then move back into the second house, live there two
years, sell it, and take the exclusion for that one.

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Roman Caesar wrote:

- quote -

No. 3 more years, added to the time of this year, would put
you at LESS than the 2 out of 5 rule.

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"Roman Caesar" <romeancaesar[at]yahoo.com> wrote:

- quote -

If you time your sale to be soon enough so that during the
preceeding 5 years you indeed used that residence as your
primary place of residence for 2 years, you will be able to
exclude all but depreciation taken since 5/97. Such
depreciation is considered a recapture and is taxed. Look up
the specific day for such calculation and be sure your days
rented/sold keep you in that 5 year window.

Mike Lewis, CPA

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Roman Caesar wrote:

- quote -

In general, yes. Assuming that your wife is considered*
to have owned and lived in the property for at least the
last two years, and noting that depreciation allowed or
allowable (to the extent of the gain) is deducted from
the $500,000 and taxed at a maximum of 25%, yes. Oh yes,
and your wife must not have taken the $250,000 exclusion
(if you're recently married, and if she was making a similar
decision) within two years of your sale.

I may be missing some other contingincies.

*I don't recall, and don't wish to check at this time,
but for ONE of two terms, your spouse is considered to
have equal status with you, even if you weren't married
at the time.

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"Roman Caesar" <romeancaesar[at]yahoo.com> wrote:

- quote -

The $500,000 exclusion you are talking about may be used
only on the sale of your personal residence-the one you live
in at the time of the sale.

Wayne Brasch, CPA, M. S. Taxation

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Roman Caesar wrote:

- quote -

At the time of the sale of your former residence, you would
have to pass the two year use test. Assuming that you
ceased using that property as your main home in Sept. 2003,
you would have to close on the sale before 3 years elapse
after the date you changed main homes. That day would occur
sometime in Sept. 2006. Even if you pass the use test, you
could not exclude any profit attributable to depreciation
you claimed or should have claimed.

See IRS Pub 523 for more details.
http://www.irs.gov/publications/p523/index.html
http://www.irs.gov/pub/irs-pdf/p523.pdf

--

Alan
http://taxtopics.net

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romeancaesar[at]yahoo.com (Roman Caesar) wrote:

- quote -

When you sell the property (exact date), you look back 5
years and see if you owned and lived there for a total of
730 days of the 1825 or so. The 730 days can be at the
beginning of the five years, at the end, or somewhere in the
middle. They DO NOT have to be contiguoous. Ownership and
residence days are not necessarily the same.

Your multiple CPAs and tax attorneys probably thought that
you could read the information in Pub 523, with no fee
charged.

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- quote -

As long as you have lived in and used house one for 2 out of
past 5 years, you can exclude the gain at the end of the 5
years, HOWEVER, all depreciation allowed or allowable is
taxable at 25% when you sell.

Helen, EA in PA
Member of The Tax Gang
President, PA Society of Enrolled Agents
Campaigning for NAEA Board of Directors - Looking for YOUR vote

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I own a property in Southern California outright. I lived in
it from 1993 to September 2003. I rented it out then and it
is producing a rate of $30k income per year presently. It
has significantly appreciated since purchase.

In August 2003, I bought another property nearby, in
California and moved into it after moving out of the first
property above.

Am I allowed to rent the first property 3 more years and
then sell it excluding up to $500,000 in profit (I am
married)? Is the date I have to sell it by also September
2006?

(FYI -- multiple tax attorneys and CPA's refused to call me
back with an answer one way or another to the above.)

Thanks,

Stuart

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