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Owner Occupied/Non Owner Occupied Question

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#1
What is the name of your state? CA

We purchased a home via owner occupied loan approx 15 years ago. We decided to rent the house to my sister, but we still stored vehicles there, etc. (we decided to rent another place closer to work). I want to sell the house now and purchase another one out of state for us to live. We never changed the loan to a non owner occupied loan. Can we sell the house as owner occupied still being that we had items in the house the whole time even with my sister renting it?
 


LdiJ

Senior Member
#2
What is the name of your state? CA

We purchased a home via owner occupied loan approx 15 years ago. We decided to rent the house to my sister, but we still stored vehicles there, etc. (we decided to rent another place closer to work). I want to sell the house now and purchase another one out of state for us to live. We never changed the loan to a non owner occupied loan. Can we sell the house as owner occupied still being that we had items in the house the whole time even with my sister renting it?
No, you cannot because of course you were claiming the rental income and expenses on your tax return.
 

HRZ

Senior Member
#3
Even if you "forgot" to claim income or depreciation ...you do NOT get to exclude capital gains on home as it was not your residence and you must recapture depreciation even if you "forgot" to deduct it earlier.

You can " exchange " the rental home for other investment property .and thus defer any taxes ..but NOT a new personal residence
 
#4
Sandra, I'm a little confused. Does your question have to do with whether you can sell the house (which is not currently owner-occupied) when the mortgage says something else? Or does your question have to do with capital gains taxes due on the profit on the sale and whether you may exempt some or all of those capital gains (this is what HRZ is answering)?
 
#6
You can sell the house


Since it isn’t owner occupied you don’t get to claim it is owner occupied for any purpose. It doesn’t matter if it has to do with the loan or capital gains or anything else you can think of. It’s as simple as it isn’t owner occupied so you don’t get to claim it is.
 
#7
You can sell the house


Since it isn’t owner occupied you don’t get to claim it is owner occupied for any purpose. It doesn’t matter if it has to do with the loan or capital gains or anything else you can think of. It’s as simple as it isn’t owner occupied so you don’t get to claim it is.
Actual answer is more nuanced than this. If Sandra actually lived there for 2 of the past 5 years then she gets a prorated portion of the capital gains exemption. Problem is we don't know how long this has been a rental (all 15 years? only since last year? something in between?).
 

LdiJ

Senior Member
#8
Actual answer is more nuanced than this. If Sandra actually lived there for 2 of the past 5 years then she gets a prorated portion of the capital gains exemption. Problem is we don't know how long this has been a rental (all 15 years? only since last year? something in between?).
Actually JAL's answer was correct...it just was broad enough to cover pretty much all circumstances.

Yes, its possible that if the OP lived in the house as their primary residence for at least 24 out of the past 60 months that a prorated exclusion might apply. However, that wasn't the question the OP asked. The OP asked if the fact that the OP stored some items there equaled the house being "owner occupied".
 
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