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Minimizing Capital Gains on Residence Sales: Sec 121 Ownership and Use Tests, Partial Exclusions, Rental Property

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Thursday, August 19, 2021

Recorded event now available

This course will discuss ways to avoid and minimize capital gains tax on the sale of a residence. Our income tax expert will discuss partial exclusions, use and ownership tests, renting before and after living in a primary residence, and calculating and reporting the Section 121 exclusion.

Description

For taxpayers who meet the ownership and use tests, the $250,000 exclusion for single taxpayers and the $500,000 exclusion for married people filing jointly provide significant tax savings. However, there are many common scenarios where taxpayers may not qualify for this relief, may qualify for a partial exclusion, or may have gains above these thresholds. In these cases, tax practitioners need to understand how to mitigate these tax burdens.

Additionally, many taxpayers have used their home as an office or rented their primary residence. This adds a new level of complexity to the gain calculations. A home office may require depreciation recapture. The taxation of residential rental property varies significantly depending on whether the home was rented before or after it was used as a primary residence.

Listen as our federal tax expert explains taxation of homes that have been rented or used as a home office, how to qualify and report a partial exclusion when a taxpayer does not meet the two out of five-year test, and how to meet the qualifying tests under IRC Section 121.

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Outline

  1. Section 121 exclusion
    1. Qualifications
    2. Partial exclusions
  2. Determining basis
  3. Exceptions to the two out of five rule
  4. Sales after renting
  5. Sales after office in home
  6. Installment sales
  7. Section 1031 like-kind exchange
  8. Other considerations

Benefits

The panel will review these and other key issues:

  • Circumstances qualifying for partial exclusion under Section 121
  • Dissimilar tax consequences of renting your property before or after it was your residence
  • Calculating depreciation recapture for office in home
  • Determining basis and cost of sale deductions

Faculty

Mathis, Toby
Toby Mathis
Founding Partner
Anderson Business Advisors

Mr. Mathis is a founding partner of Anderson Law Group and current manager of Anderson’s Las Vegas office. He has...  |  Read More