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Ask Millionacres -- Will I Owe Cap Gains on a Rental Investment?


[Updated: May 20, 2021 ] Mar 19, 2020 by Matt Frankel, CFP

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Q: We've owned an investment/rental home in Nevada since 2013 and are retired. We are currently living in this home and are now renting out our former primary home in Utah. We kept our Utah residency status -- we are registered voters in Utah, have Utah driver's licenses, and we file Utah tax returns. In June 2021 we plan to sell the Nevada house that we currently live in so we can live off the gains. In 2021 our only major source of income will be from the Utah house rent. The Nevada sale gains will be approximately $200,000. Due to our low income, will we qualify for the 0 percent capital gains tax bracket? To my knowledge, we won't qualify for the home sale gain exclusion since we are not technically Nevada residents according to IRS pub 523. Will we have to pay capital gains tax? -- Marianne

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