ANSWERS: 2
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Depends. But probably not, you have to live in the house for 2 years to get out of the Capitol Gains concern, and since you only rented it for a few months, it should still be considered as your residence for the year before's taxes. Also, if you used the money to purchase a new home, then there is no gains, as the property law allows you go "trade" with no tax burden, the house you bought just has to be equal or higher. I'm not a tax person, but we've used both "tricks" in the past to keep away from the capitol gains loss.
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If this house was your "primary residence" for 3 of the past 5 years, then up to $250,000 of capital gain you received from the sale would be exempt from tax.
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