“Hi Gary. I just turned 55 and I was wondering if that means I can sell my rental house tax-free?”
***ANSWER:
Where do I start
Prior to 1997, tax law allowed homesellers 55 or older a once-in-a-lifetime option to exclude $125,000 of gain on their principal residence. This did NOT a investment property.
And that law was changed in 1997 such that a single person (regardless of age) can sell their principal residence and exclude $250,000 of gain. A couple can exclude $500,000.
Of course, none of this applies to rental property anyway. The most common way to sell investment property and not pay tax is to do a 1031 tax-deferred exchange into another investment property.
There are other complex and rather esoteric approaches that are beyond my scope.
