How long would an owner of a income property have to live in their investment property before selling?

In Selling Property - Asked by Saundra Lee A. - Nov 28, 2010
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Answer(s)

Rob B.
Chandler, AZ

Saundra....
To my knowledge an owner does not have to live in their investment property in order to sell it. The question may be related to a conversion of a residential property to an income property for the purpose of recognizing long-term capital gain or for a 1031 exchange. This is a question that should be answered specifically by your CPA. However, I have seen this work if the conversion was in two different tax years.
Good Luck Sandra....
Rob Baird, CA RE License #544165 (One of the oldest, active licenses in CA) 951 515-5855 Email: rob@capratecommercial.com

Nov 29, 2010
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Michael J.
Fort Lauderdale, FL

if it's an investment property its is not your homstead or primary residence and does not qualify you for the capital gains tax exemption. If your looking for a 1031 exchange I THINK you have 12-18 mths to find another property to roll your equity into tax-free. there are usually 1031 specialists out there that will be more than happy to guide you.

Nov 30, 2010
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Beth W.
Claremont, CA

Hi Saundra. It appears you want to avoid paying capital gains taxes? Is the income property a SFR (Single family residence) or 1-4 units? If so you'll want to convert them to your primary residence for a minimum of 2 years. To sell right away you'll want to defer paying the taxes now by doing a 1031 exchange. The proceeds go to the holding company allowing you time to obtain a replacement property. That way you never take possession of the funds, thus incurring no tax liability.

Nov 30, 2010
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Robert B.
Broker/Agent
Brookfield, WI

True statements above, if the goal is to avoid capitol gains, you need to live in the rental for 2 of the last 5 years in order to "recapture" the gain in the investment. Get a hold of your tax person before making any move. Moving from property to property in your portfolio is a strategy to end up in the one you want to live in eventually, and avoid capitol gains in the end.

Dec 15, 2010
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