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I wanted to let you in on some information about some big tax implications of selling a rental property in Ventura County that many sellers don’t know about. There are benefits to selling a rental property that was previously a primary residence and has been a rental for fewer than three years.
A benefit of selling a rental property that was owner-occupied for at least two of the last five years and was a primary residence is a home sales tax exclusion law. Some homeowners aren't aware of this, but legally you’re allowed to sell the property and pay no capital gains taxes for an individual up to $250,000 and for a married couple, up to $500,000.
There are benefits of selling a rental property
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However, if you continue to rent the property and you didn’t occupy the property for two of the last five years and did decide to sell the property in the future, at that point, you may be subject to capital gains taxes.
Depending on your situation, talk to your tax advisor and have them talk you through a few scenarios. What would you pay in taxes now if you decided to sell? What would you pay in taxes if you decided to sell in 2-4 years? Then you can decide what the best decision is for you and your family.
