We purchased a home in California in 1995 for $250k mainly for a rental income. I have rented it out since 1995. Now the house is vacant. We are thinking of moving into this rental home and converting it to our primary residence. Then sell it after two years. We will be spending 75k for remodeling. It may sell for
800k after two years. Do we get the full 500k of capital gain exemption? I understand that we will have to recapture the depreciation. A friend told me that I can only get a pro-rated exemption. If I owned the house for 20 years and I only lived in it for 2 years than I can only get tenth of the exemption (50k). I am all confused. I always thought that all I have to do it make it a primary residence for two years to get the 500k exemption.- posted
11 years ago