Home
Tax Articles
Tax FAQ
Introducing Our Firm
Our Services
Real Estate Taxletter
Need Help?
Other Websites
Site Map

Find us on Facebook
Follow me on Twitter
Connect on LinkedIn
Connect on Google+

How can we avoid tax liability for selling a home we have rented?

August 21, 2008


From:  David
Date:  19 Apr 2008

We live in California and have a home in Washington State that we have rented since 2003. We have been told that we should not sell the Washington home due to the tax liability. We would need to live in the home two out of five years before we sell the home. To do that we would have to leave our California jobs and move back to Washington. How can we stop this vicious cycle?

We look forward to your response.

Answer

Date:  25 Apr 2008

Hello David,

Since you have been renting the home since 2003, it is investment property that qualifies for a tax-deferred exchange. How about exchanging it for another property that generates cash flow or better appreciation or is located closer to you? Consider exchanging for a tenant-in-common interest.

If you receive cash for selling the property, you arenít going to be able to avoid income taxes. As California residents, you are subject to California tax on your worldwide income.

Good luck!
Mike Gray

We have more answers to frequently asked real estate tax questions! We also offer up-to-date information about new tax real estate tax developments in Michael Gray, CPA's Real Estate Tax Letter.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained on this website was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.

How can we avoid tax liability for selling a home we have rented?

Home | Real Estate Taxletter | Articles | FAQ | Introducing Michael Gray, CPA | Need Help? | Other Links


Michael Gray, CPA
2190 Stokes St., Suite 102
San Jose, California 95128-4512
(408) 918-3162
Fax (408) 998-2766
email: mgray@taxtrimmers.com
© 2016
Subscribe to
Michael Gray, CPA's
Real Estate Tax Letter
!

subscribe
unsubscribe