Re-investing Rental Property
I am selling my current rental property and using the proceeds as a down payment on a new house that will be my primary residence and i will be renting my current primary residence.will i have to pay any taxes on the sale of the rental property?
Unless you have occupied it for a cumulative 24 of the previous 60 months you will owe taxes on the capital gains and depreciation. Other options you have are to do a 1031 exchange for another investment property, or perhaps refinance one or both of your properties or take out a HELOC on your current residence and use the money to buy the new residence.
If you have owned and occupied your current primary residence at least two years to date, sell it instead of your rental property. Your sale profit up to $250K per taxpayer will be tax free.
Perhaps you have another compelling reason to sell your rental property instead, but if you do, your profit is a taxable capital gain and depreciation allowed since May 1997 will be recaptured.
bbriscoe,
Understand that your question is a different situation than presented in the original post.
Yes, if you used your current or former primary residence as a rental any time before you sell it, unrecaptured depreciation allowed since May 1997 will still be recaptured even if your profit due to appreciation qualifies for the Section 121 capital gains exclusion.
If I sold the rental and bought another house as a rental would taxes be do?