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Tax Law (Questions About Taxes)/Tax break on primary residence (can I rent it?)



I am in the process of buying a new home. I currently own (and have lived in) a townhouse for the last 10 years.  I use a very small portion (5%) for home business that I claim on my taxes.

My question is if I can move into my new home, rent the old home for 2 years, and then sell it and keep the tax exemption on the profit of the sale of the old home?   



Thanks for your question.

You will not be able to take a full exemption.  First, you will pay tax on the depreciation recapture.  Even if you do not take depreciation, the IRS treats it as though you do. The depreciation recapture applies to the business use portion and the rental period. Secondly, you will need to allocate the gain between the rental and non-rental periods and make allowance for the home office deductions previously taken. This allocation gets a little tricky, and is too complex to detail in this volunteer forum.

Hope this helps.

John Stancil, CPA

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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