Message Font: Serif | Sans-Serif
No. of Recommendations: 0
GeminiGVR, the answer appears to be yes and no. You want to look at IRS Publication 523 (, and in particular the section called "Ownership and Use Tests". There is an example given in which an owner of a 4 unit apartment building lives in one unit and rents out the others. The exclusion is allowed on the unit the owner lives in (so 1/4 of the sale price), but capital gains taxes are due on the gain from the sale of the other units.

Your Mom's situation is different, somewhat, and I am sure that the fact there are existing leases is a complication. It might affect the sales price, but it might not: NY Times had an article about $895,000 fixer-upper apartments recently.

It sounds as though it is worth spending a couple of hundred dollars to discuss the situation with a real estate attorney. This sort of issue must come up all the time in NYC. If Mom doesn't know one, you could probably go to your own lawyer in Miami and ask him or her to make some phone calls. My experience has been that lawyers usually have contacts, and will make calls as a professional courtesy. (Maybe not for free, but it's not picking someone out of the Yellow Pages.)

Regarding the rent vs. buy question in Florida, my personal suggestion would be to start out renting. My parents are approximately the same age as your mother is, and used to spend 6 months in Florida. The landlord wondered if they would like to buy. They said no, it was better to pay rent for 6 months than a mortgage for 12. Again, your situation is different, but the arguments in favor of renting to start out are: 1) you never know how you'll like it, and 2) your circumstances, like health, may change.
Print the post  


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.
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.