Date: 19 Apr 2008
We live in California and have a home in Washington State that we have rented since 2003. We have been told that we should not sell the Washington home due to the tax liability. We would need to live in the home two out of five years before we sell the home. To do that we would have to leave our California jobs and move back to Washington. How can we stop this vicious cycle?
We look forward to your response.
Date: 25 Apr 2008
Since you have been renting the home since 2003, it is investment property that qualifies for a tax-deferred exchange. How about exchanging it for another property that generates cash flow or better appreciation or is located closer to you? Consider exchanging for a tenant-in-common interest.
If you receive cash for selling the property, you arenít going to be able to avoid income taxes. As California residents, you are subject to California tax on your worldwide income.
IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised
that any written tax advice contained on this website was
not written or intended to be used (and cannot be used) by any
taxpayer for the purpose of avoiding penalties that may be
imposed under the U.S. Internal Revenue Code.