I have a client in Atlanta who bought a house for $400K made improvements of $150K. They used it as their primary residence for 2+ years and then this past Aug. 2007 took a job in another city and moved. The client did not want to sell since they felt they would probably sell for a loss. Instead, it is now being rented.
Assuming a rebound in the housing market and resulting appreciation of this house, I would think that this client needs to sell within the next three years to claim the Sec. 121 home sale exclusion. However, my question is what if they decide to keep the house as a rental. I would hate for them to lose out on tax free appreciation. Thus, any suggestions as to a way to keep it and get the Sec 121 exclusion. Maybe set up an LLC and sell it to that entity near the end of year 3?
As always, thanks for the wealth of insight.
Brian
Assuming a rebound in the housing market and resulting appreciation of this house, I would think that this client needs to sell within the next three years to claim the Sec. 121 home sale exclusion. However, my question is what if they decide to keep the house as a rental. I would hate for them to lose out on tax free appreciation. Thus, any suggestions as to a way to keep it and get the Sec 121 exclusion. Maybe set up an LLC and sell it to that entity near the end of year 3?
As always, thanks for the wealth of insight.
Brian