David Woods wrote:
- quote -

I disagree [see my separate response for other reasons.]

The rules allow for an allocation of the exclusion when a
taxpayer sells land adjacent to his residence. I believe
that this situation resembles that more than it does the
sale of two UNCONNECTED/non-adjacent parcels where one is a
principal residence and the other not.

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Bob H wrote:

- quote -

Because of the renting at less than FRV to a family member,
I would say that the rental part of the property was also
"personally used" by you, and as an attached/adjacent
property in the same sale, it qualifies to be excluded as
well.

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"Bob H" <dontspam[at]nospam.org> wrote:

- quote -

No.

- quote -

By all definitions, its not your primary residence. A two
unit home is a two unit home even if you own both halves and
rent half to your family.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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Bob H wrote:

- quote -

As I recall, the 121 exclusion only applies to your
PRINCIPAL personal residence. Since it sounds like you have
TWO residences, the exclusion wouldn't apply to the second
one. Normally the sale of a so-called "vacation" property is
a fully taxable event, save only that a loss associated with
the personal use isn't deductible.

MTW

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Hello all:

My home consists of two units, both with seperate entrances
and living facilities (bath, kitchen, etc.). I have been
renting the smaller unit to family over the years always at
substantially less than FMV. My reading of the rules puts
this unit in "vacation home" territory, as a seperate
dwelling.

Since renting to family at less than FMV is defined as
"personal use", would that attach to the sale making the
whole property the sale of one residence (and tax-free in my
case)?

On the other hand, Sec. 121 calls for taxpayer occupation of
the dwelling sold.

It is clear there are two dwellings, but where the smaller
is considered a personal use dwelling for the determination
of treatment under rental//vacation home rules, I was hoping
to dodge the tax bullet.

Anyone has seen this before - help appreciated!!

BH

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