10
Mar
Mar
Albert, age 57, leased a home for one year in Denver with an option to purchase as his personal residence. At the end of the lease, he bought the house. He lived there for an additional 25 months before his employer transferred him to Tucson. Expecting to be in Tucson for 18 to 24 months, he rented the Denver house for 18 months with an option to extend on a month to month basis for an additional 6 months. At the end of the 18-month period, Albert’s employer offered him a permanent position in Tucson as branch manager. The tenant who had been occupying Albert’s home in Denver purchased it at the end of the 24-month extended lease period. Is Albert eligible to elect exclusion treatment under § 121?
Answer:
Yes. He meets the 2 year rule, so can exclude the capital gains. However, when calculating the exclusion, the basis is affected by the depreciation he claimed or could have claimed while renting the proporty.
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on Tuesday, March 10th, 2009 at 4:23 pm and is filed under Taxes.
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