Primary Residence Tax Exclusion Question
Hi.
I own a condo and i rent out a room to a friend of mine for storage. she lives with her bf, but has her mail sent to my condo. her intentions was that she wanted a place she can call her own, if her and her bf got into a fight and she needed to ignore him for a while. so far, this works for me, cuz i never see her.
my question is, will her helping me with my mortgage and the fact that there's more than my name in the mailing address negatively affect my 2 of 5 years primary residence tax exclusion when i do decide to sell my condo within the next year or 2? i've lived in it for about 1yr and 3 months.
if so, i might ask her to find her own place. (she was supposed to only be around for 3 months but turned into 7 and counting..)
thanks.
How are you reporting and treating the property? Are you reporting and treating it as your primary residence? Are you reporting any rental income, depreciating your property or otherwise reporting or treating it as rental property?
[addsig]
My guess is that you are pocketing the rental income each month.
In all reality you should be reporting that income and a portion of the property you sell would still be subject to capital gains tax and depretiation recapture tax.
Now if you are doing what I think you are doing you can likely not have any problem excluding the gain. There are no forms to fill out to the IRS or anyone else.
This is a touchy subject and I am not giving you advise here. You should contact an accoutant to answer your question.
That said, one can make a comparison to waitresses not reporting tips as income on their taxes. Are they supposed to? YES Is it very likely anyone will find out NO.
GOOD LUCK
Hi.
It is my primary residence as i do live there. right now, i haven't reported anything yet. i guess i will talk to my accountant. if getting a couple of hundred a month means paying 10 times in taxes on gains that's totally not worth it.
Thanks.