non-qualified use and adjusted cost basis could make you think twice before moving back into your rental to avoid taxes. Factors like depreciation recapture, qualified vs. Let’s take a look at some of the moving pieces for determining the taxes when you sell your rental. Living in your rental full-time for at least two years prior to selling can help you take advantage of the gain exclusion of $500,000 ($250,000 if single), which can wipe out all or most of your gain on the property. One strategy for paying less tax is to move back into your rental and use the property as a primary residence before selling. You could owe capital gains tax in addition to potential depreciation recapture on the profits from your rental sale. You might be considering selling your rental to lock in profits and enjoy the fruits of your well-timed investment, but realizing those gains could come at a cost. National real estate prices have been on the rise since 2014, and many investors who jumped into the rental industry since the Great Recession have substantial gains in property values (S&P Dow Jones Indices, 2019). Updated by Geoff Curran, Jeff Barnett, & Scott Christensen
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