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Capital Gains Tax on Residential Real Estate Transactions As a REALTOR who manages rental property, I often get asked about capital gains taxes that pertain to residential real estate that someone both has lived in and also rented to others. Currently, the capital gains tax rate is 15% of the gain. Now a property can be deemed a principal residence for tax purposes and sold without owing the tax if the following conditions apply: 1. You must have resided in the home for at least two of the last five years. The two years can be but do not need to be consecutive. 2. Another property cannot have been sold as a principal residence within two years prior to the current sale. Nor can another one be sold until two years after. 3. You must prove that you resided in the property for two years. Mailing address, address on record with the IRS, utilities accounts in your name, can be ways of proving residency. Don’t forget recapture tax on any depreciation you have claimed while the home was a rental. Gone is the one-time break of $250k per individual or $500k per couple capital gains tax exemption.

Contributed by virginiabeachrealestate on April 28, 2008, at 2:27 PM UTC.

PLEASE VISIT THE CONTRIBUTOR'S WEBSITE

Mark A. Moore, REALTOR, ABR, RE/MAX Alliance Realtor Website www.markamoore.com

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