I bought a new home in KS and kept my one in CO becuase the market was soft and I had hoped within a few years I could sell it for more.
I'm renting the one in CO now.
For my '08 taxes what do I need to do?
I'm aware of the capital gains exemption for homes lived-in 2 of 5 years. So I have 3 years to sell my CO home (or move back, etc). I assume it's in my best interest to keep that capital gains exemption (unless, of course there is no gains! ouch!).
Anyway, I'm paying 2 mortgages, sets of taxes, and insurance. I'm renting the CO home to cover my costs. I understand I can take the rent as income and then deduct the interests, property taxes, and insurance as costs. I also understand I can deduct depreciation. But, again, I don't think I want to lose my capital gains exemption.
How do I sort our the best solution? Or so I have any options?