There are no extensions for the 180 rule. However, the Secretary does have the authority to extend deadlines in Presidentially declared disaster areas. Usually the IRS will issue a press release to that effect. Hopefully, you already have a QI that knows the answers to these questions.
Yes, some taxes will apply. You are still eligible for the capital gains exclusion on the sale of your primary residence, but depreciation will still be recaptured.
I was told by an accountant that once my old personal residence (of 1.5 years agao) became a business rental it would then move into being a taxable sale unless I do an exchange. Could this accountant be totaly wrong?
There is a new Revenue Procedure (Rev. Proc. 2005-14) out this year that allows you to take advantage of both the 121 exclusion (250/500 exclusion) and then complete a 1031 exchange for any remaining capital gain or depreciation recaputure that would be taxable. It must have been a primary residence first and a rental property second and at the time of sale.
In order to determine if you qualify you must do a 60 month "look back". You look back 60 months prior to the date of sale and as long as you have lived in the property as your primary residence for at least 24 months out of the last 60 months you will qualify for the 121 exclusion. If it was a rental or investment property at the date of sale, then you can also complete a 1031 exchange for any remaining taxable items as long as you exchange into other rental property.
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Look at the tax savings as mentioned previously, but also look at the area and see if there is a good opportunity for appreciation of the home in the next few years. If you think the property will grow as an asset, it may be a good investment even if it costs and extra $100-$200 per month.
Trigg44, If mom lives in or you are looking for a SFH in chandler AZ, then my guess is the appreciation will be worth it. I have rentals in Goodyear and I think Chandler is compairable, the appreciation has been great last 1.5-2 years and looks like it should continue for a couple more years. Anonther option since apreciation will likely be your goal is not trying to pay PITI and go for an interest only loan, if monthly cash flow is a concern. Good Luck, Don
There are no extensions for the 180 rule. However, the Secretary does have the authority to extend deadlines in Presidentially declared disaster areas. Usually the IRS will issue a press release to that effect. Hopefully, you already have a QI that knows the answers to these questions.
I would be happy to email you a link to the IRS web site that lists all of these issues.
[addsig]
Yes, some taxes will apply. You are still eligible for the capital gains exclusion on the sale of your primary residence, but depreciation will still be recaptured.
I was told by an accountant that once my old personal residence (of 1.5 years agao) became a business rental it would then move into being a taxable sale unless I do an exchange. Could this accountant be totaly wrong?
There is a new Revenue Procedure (Rev. Proc. 2005-14) out this year that allows you to take advantage of both the 121 exclusion (250/500 exclusion) and then complete a 1031 exchange for any remaining capital gain or depreciation recaputure that would be taxable. It must have been a primary residence first and a rental property second and at the time of sale.
In order to determine if you qualify you must do a 60 month "look back". You look back 60 months prior to the date of sale and as long as you have lived in the property as your primary residence for at least 24 months out of the last 60 months you will qualify for the 121 exclusion. If it was a rental or investment property at the date of sale, then you can also complete a 1031 exchange for any remaining taxable items as long as you exchange into other rental property.
[addsig]
Look at the tax savings as mentioned previously, but also look at the area and see if there is a good opportunity for appreciation of the home in the next few years. If you think the property will grow as an asset, it may be a good investment even if it costs and extra $100-$200 per month.
Trigg44, If mom lives in or you are looking for a SFH in chandler AZ, then my guess is the appreciation will be worth it. I have rentals in Goodyear and I think Chandler is compairable, the appreciation has been great last 1.5-2 years and looks like it should continue for a couple more years. Anonther option since apreciation will likely be your goal is not trying to pay PITI and go for an interest only loan, if monthly cash flow is a concern. Good Luck, Don