Tax Liability Rental Property
I purchased a condo in Sand Diego, back in 1989 for $60,00 with the intent of building equity and, selling it, and using the profits to purchase a home. I am in the military, was re-assigned to a bases out of state from 1994 until now.
I wanted to sell the condo in 1994, but at the time, the place was worth $35,000. As an E-4 I didn't have the cash to cover the losses. We rented out the place, at a loss, month to month, until now.
We finally moved back to CA and decided to get rid of the place
The real estate market has obviously changed and the place is now in escrow for $162,000.
I wasn't aware of capital gains on the place, until now because of the pending sale.
We were hoping to use tho proceeds now to use as a down payment on a primary place of residence, but it doesn't seem like we are going to be able to.
My question is: Am I able to qulifiy under section 121 Safe Harbors, "unforseen circumstances" - "the circumstances causing your sale were not reasonably foreseeable when you began using the
property as your main home" ?
V/R
J D
Has the condo ever been your primary residence? Was the condo your primary residence for 2 of the past 5 years? If so you may be able to exclude some of the gain. The rules have recently been updated to allow a portion of the gain exclusion if it was your primary residence for less than two years, depending on the circumstances of the sale (ie health, job, etc)[ Edited by AdamR61 on Date 07/28/2003 ]
Thanks for the relply,
Yes, when we first bought the condo, we lived in it, for over two years. From 1989 to 1994, when we were transfered.
We moved out in 1994 and have not lived in it since.
Another factor which may be of importance, is the size of the condo - 604 sq. At the time of purchase it was just my wife and I. We are now a family of five. 604 sq is not suitable housing for a family of five.
any suggestions?
JD
You converted your Condo into a Rental. Didn't live in it 24 of the last 60 months, so will not be forgiven the $250K exclusion for each owner/occupant.
My suggestion is: to find a place of greater value and greater loan, you would like to reside in.
Exchange into (Purchase) it with the proceeds of the sale you have pending. This is not a taxible event. and rent it for a "reasonable (talk to your tax advisor)time', then convert it into your residence.
You do need competent Real Estate advice from an experienced Exchangor. I can refer you if you email me. See profile.