Posted by dealmaker on March 18, 2005 at 09:36:17:
I’d have a good discussion with CPA (1/2 hour @ $100/hour) and attorney, 1/2 hour (@$180/hr) before doing anything. One possible problem with the land trust is that when doing a 1031 exchange, the ACQUIRED property must be title EXACTLY as was the RELINQUISHED ppty.
I’m neither a CPA nor an attorney, just a guy that knows enough to know when to call the pros. Also take a good strong look at your numbers, PV, rent rate etc.
dealmaker
Comply w/ IRS Tax Exemption Rule - Posted by Mike
Posted by Mike on March 17, 2005 at 16:45:56:
Let’s say I’ve lived in my personal residence for 1.5 yrs before I leave town to pursue my MBA, at which point I rent it out. Then after 2 yrs, I move back into my property for at least another 0.5 yrs to meet the 2 yr requirement for the IRS capital gains tax exemption on my primary residence, before selling it.
While I’m away and renting it out, is it recommended to reclassify my place as an investment property or can/should I leave as primary residence, or doesn’t it matter?? My goal is to comply w/ the IRS 2-outta-last-5-yrs rule, benefit from depreciation and maintain my homestead exemption if possible.
Any advise would be greatly appreciated. Thanks.
Re: Comply w/ IRS Tax Exemption Rule - Posted by dealmaker
Posted by dealmaker on March 17, 2005 at 22:06:08:
Well, if you’re renting it out you MUST REPORT the income, so per se it is an investment property. It will also be depreciated and that will have to be recaptured upon sale.
I’m guessing you’re in CA, AZ or GA to get enough appreciation in that short a time to make it worthwhile?
dealmaker
Re: Comply w/ IRS Tax Exemption Rule - Posted by Mike
Posted by Mike on March 18, 2005 at 09:25:04:
Thanks. I’m on the water in FL and appreciation has been nice at 20%+.
I was also thinking of putting it into a Land Trust before I rent it out. Do you see any reason not to do that?