I will try to outline all of the pertinent info, to getan accurate answer here!My wife purchased her first house in 1992. She paid$60,000 for it. She (and later we) lived in it asher primary residence until Feb, 1997. At that timewe took out a bridge loan on that house and purchasedour current home.For the past 4 years and 4 months we have been livingin our current home and renting out the original home.For the past 2 years, we have been renting to my wife's sister, who hoped to purchase it eventually.Now, we are in the process of selling the home to anotherindividual (not a family member). The selling price willbe $89,000. Our selling costs and improvements will totalapproximately $7,000.So, unless there are any mitigating circumstances in the aboveinformation, I figure we are paying Capital Gains on approximately$22,000 ($89,000-$7,000)-$60,000=$22,000Anyone see any way around this? Renting to relative help at all?Finally, since the house was in my wife's name and she makes lessincome than I do, should we look into filing separately to reduceour Capital Gains rate?Thanks for any and all assistance!Neal
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