By cassandra ingrham

A client called and said, "My wife and I want to sell her rental property in Oakland, California."

My question was:  "Will you realize a profit when you sell the property"?

His response was:  "Yes, about $160,000.  It's a nice house in the Oakland hills over looking San Francisco."

I asked:  "Are you still living in the apartment that you moved into a year ago?"

He replies:  "Yes, why do you ask?"

I explained to him, that if he and his new wife sold the property in the Oakland hills, as a rental property or investment property that they would be responsible for capital gains taxes.

But if they moved into the property and made the property their primary home for 3 years prior to selling the property, there would be an exclusion of up to $500,000 on the sale of the home. ($250,000 if single)

He asked for further clarification.  He couldn't believe that he wouldn't have to pay ANY taxes on $260,000, if he just moved into the property for 3 to 5 years!

I explained where he could find the information, in writing, on the IRS website.  irs.gov - put in keywords: sale of home, exclusion

I am happy to report that the client and his new wife have moved to a lovely home in the Oakland hills, which the wife received from her mother, after a relative passed away.

Note:  Certain factors have been changed to protect the privacy of the client.