Discussion:Converting rental to personal residence

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Discussion Forum Index --> Basic Tax Questions --> Converting rental to personal residence
Discussion Forum Index --> Tax Questions --> Converting rental to personal residence

Michaelstar (talk|edits) said:

15 July 2008

I believe I recently came across something on this topic about either the law has recently changed or is up for change when a t/p has multiple rentals (or even one for that matter) and decides that they are going to convert the rental to a personal residence, live in it for two years and then take advantage of sec 121.

Has anyone come across any recent information on this topic in the last year as to sec 121 no longer being available in this situation? I know that the depreciation needs to be recaptured but what I thought I read was not about that which is not a new concept. Thanks for your help.

Solomon (talk\|edits) said:	15 July 2008
As long as the unrecaptured 1250 gain is not excluded, I think 121 still applies after the two year residence.

EZTAX (talk\|edits) said:	15 July 2008
You might be thinking of the rule change regarding the property acquired in a 1031. My recollection is that you now must own the new property for a full five years before selling it, in addition to living in the new property for the two year period as a principal residence.

Trillium (talk|edits) said:

15 July 2008

The version of the Mortgage Forgiveness Debt Relief Act (HR 3648) that initially passed the House included new restrictions on excluding the gains from sales of residences and vacation property that, as I recall, would have eliminated/reduced the effectiveness of this and similar strategies. But the Senate took those new restrictions out. So when the final bill was passed on Dec 20, 2007, that stuff was no longer there (whew!).

Michaelstar (talk\|edits) said:	16 July 2008
Again - Thank you for your posts. I have searched the last couple of days and found nothing to back up what I believed I previously read. Must have been one of the many "idea's" of legislation to increase taxes that never actually pass the muster.