Tax Law (Questions About Taxes)/lease-option

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Question
I would like to know my tax ramification upon the sale of my home which is lease-optioned for 2 years.
I have lived in the home since 1995, now I am having someone lease it for 2 years before we close on the sale in 2015. The sale price is (and will be) $132,000 and I will have a balance of $58,000 when we close in two years.  I will see a gain of $74,000.  Will I be taxed on that gain as if it were an investment property because of the lease-option?  I have worked for that equity while I lived here as my primary residence....except for the 2 years of course.  So what is my tax ramification on the gain at closing?
Thanks, Rob

Answer
Rob,

Thanks for your question.

A lot depends on the terms of the lease/purchase option but since you will be leasing it for two years, you still fall within the requirements that you live in the house for two years of the most recent five year period.  However, you will have to pro-rate the amount of exclusion based upon the time it was a principal residence and the time is was a rental unit.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

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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 www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

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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FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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