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+

Can I claim a primary residence exclusion for an apartment if I rent others connected to it?

August 12, 2011


From:  Eugene
Date:  16 Apr 2009

Mr. and Mrs. X bought a rental property in 1978, and have used one of four apartments as a summer residence. They will make it their permanent residence for two years prior to selling it. Can they continue to rent the other units while claiming it as their principal residence? It has been fully depreciated since 2003.

Thank you for providing this helpful information.

Eugene

Answer

Date:  6 May 2009

Hello Eugene,

They can rent the units while living in one. The exclusion for sale of a principal residence wonít apply to the rented units. The gain will have to be prorated for the personal residence versus the rental units. (Treasury Regulations Section 1.1212-1(e).)

Also, the tax law was recently changed so that periods of use other than as a principal residence after 2008 will reduce the exclusion, and that the amount of gain up to depreciation taken for periods after May 6, 1997 isnít eligible for the exclusion.

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.

Can I claim a primary residence exclusion for an apartment if I rent others connected to it?

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