I have a house and a condo that I have been renting out. I understand that if you sell your house and move to another you can take the profits from the house you sold and put it towards the new house free of taxes or capital gains taxes. Well we are selling our house and condo to upgrade. What are the rules regarding capital gains taxes on the condo which is a rental property?

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Posted by NEWBIE

Member since Jun 2008

196 posts

Posted on 4/17/11 at 9:01 pm to GIR

its not free of taxes. What your thinking of is a 1031 tax Deferred exchange. The properties must be of like kind. The key is what your intentions are with the property.
Did you buy the condo as an investment property? Or did you live there first and choose to rent it out later? The rules change if you have lived at the property.
I'm sure there are others on here much more informed than I.
If none help out by tomorrow I know Title Exchange Company here in Baton Rouge is pretty well respected when it comes to 1031's.

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Posted by AUFanInSoCal

Orange County

Member since Nov 2007

1616 posts

Posted on 4/18/11 at 10:43 am to GIR

Taxpayer Relief Act of 1997

The act exempted from taxation the profits on the sale of a personal residence of up to $500,000 for married couples filing jointly and $250,000 for singles. This is for residences that were lived in for at least 2 years over the last 5.

See also Internal_Revenue_Code_section_1031 which is a way to sell a (non personal residence) property and not have to pay capital gains tax (at least immediately).

LINK

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