Avoiding Taxes On Sales of Mixed Use Homes
Posted by taxguru on February 16, 2005
IRS is issuing a clarification on how to best avoid taxes on homes that have been used as both a primary residence and business or rental. Utilizing a combination of the Section 121 tax free exclusion and Section 1031 like kind exchange is not anywhere close to a new idea. We have been doing just that for decades with tax and exchange clients, including long before 1997, with the old rules requiring a new residence to be purchased within a certain time frame and the measly once in a lifetime exclusion of $125,000 of gain per person or couple. This new ruling will just make those who feel uneasy about doing anything that is not explicitly spelled out for them a little more comfortable.
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