Atlanta Deferred Exchange
The ADE Difference


Atlanta Deferred Exchange

Can I still use my Sec. 121 gain exclusion if I rent out my home?

  Q: I am considering moving out of my home and renting it. If I do this, will I lose my Section 121 exclusion on the gain when I sell it?

A: No, you can still preserve your exclusion assuming you have used the property for the previous 2 years as your primary residence and that you sell the property within 36 months of changing it to a rental. The Housing and Economic Recovery Act of 2008 requires a 5-year look-back.  As long as you have used the property as your primary residence for a minimum of 2 of the last 5 years, you qualify.  Also, there are exemptions to the 24-month requirement for certain "unforeseen" circumstances such as military deployment, changes of employment or for health reasons.