Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
Actually, the real issue is how long you keep the property as rental property before "converting" it to personal use. And there is NO guidance from the IRS in this area, which explains the differing answers. Some CPA's I've talked to say you should keep the property as a rental for at least one year, to show that you aren't attempting to evade income taxes. Even the most aggressive CPAs recommend that if you do convert the property to personal use soon after an exchange, you do it after two tax years (last three months of one, first three months of another MAY be enough). And keep very accurate records during the rental periods to show that you were legitimately renting the property.

My aunt and uncle asked me the same question last year. A number of retirees are converting and selling their rental properties consecutively, one every two years, to benefit from the gain exclusion. It just gets tricky when you've done the like-kind exchange.
Print the post  

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement