Contact UsMy husband and I will be moving and we will be renting out our home. (A little nervous about that!) We will be renting at our new location, too. My head is spinning! Are there tax considerations I should be thinking about? Will it be a benefit to us come tax time?
Abraham Itani, CPA
Are you moving for business?
How far is the move?
How long have you lived in your own house, and are you planing to move back into it soon?
Are planning to sell your own house in the near future?
Please, reply to my questions, so I can better address your primary concern.
Regards,
Abraham Itani, CPA
Reply
597 weeks ago
How far is the move?
How long have you lived in your own house, and are you planing to move back into it soon?
Are planning to sell your own house in the near future?
Please, reply to my questions, so I can better address your primary concern.
Regards,
Abraham Itani, CPA
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Tax Professional Answers
William Keats
Moving expenses are deductible if you are moving to a new home because of a new principal work location. (Form 3903) There are certain requirements that must be met: The move must be within one year of the date taxpayer (TP) started working at the new job location, and the distance from the new home to the new job location is not more than distance from old home to the new job location.
Distance test: New workplace must be at least 50 miles further from TP's old home than the old workplace was.
As far as renting: (Schedule E) Rental income will be taxable and expenses will be deductible, including depreciation. As far as taxes are concerned, this is a good move. However, if you sold the home, assuming you lived in the home two of the last five years of ownership, there would be no tax on the first $500,000 of gain. But if you own it as a rental property, and time goes by, say 5 years or more, and then you decide to sell, any gain would be fully taxable. Also, the depreciation would have to be added back as income at time of reporting the sale.
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553 weeks ago
Distance test: New workplace must be at least 50 miles further from TP's old home than the old workplace was.
As far as renting: (Schedule E) Rental income will be taxable and expenses will be deductible, including depreciation. As far as taxes are concerned, this is a good move. However, if you sold the home, assuming you lived in the home two of the last five years of ownership, there would be no tax on the first $500,000 of gain. But if you own it as a rental property, and time goes by, say 5 years or more, and then you decide to sell, any gain would be fully taxable. Also, the depreciation would have to be added back as income at time of reporting the sale.