Generally, the government gives you three years from the date you move out of your home to sell it and avoid paying any taxes on the capital gains realized. You do need to pay taxes on the depreciation allowed while it was a rental property, however.

You say you moved out of the home November 2004, which means that the three year window closed during November 2007. Based on these dates, it looks like you'll be taxed on the home's appreciation plus any depreciation claimed since putting it in rental use.

So your goal is to minimize your capital gain. Start by tallying up all of the improvements you made to the home over the years. Remember, your gain is based on the sales price LESS closing costs LESS purchase price (including certain closing costs) LESS the cost of improvements. Maybe when you factor in closing costs and improvements, the gain isn't as large as you had originally thought.

You can also use your other capital losses to offset the gain realized on the sale of your home. So if you have losses in your non-retirement account, consider selling some of those investments before the end of the year.

Finally, one way to defer paying taxes on the gain is to structure the sale as a deferred exchange. But this means that you need to purchase a replacement rental property within 180 days of selling your current rental property, and need to meet other specific conditions. It looks like that isn't your current plans.

Good luck minimizing the tax bill on the sale of your home.

Zip Code: 01801

Thanks you so much for such a through answer, if only I had known about the 3 year window! Anyway, I have done several repairs and will gather that info., I guess the route I'll have to take is minimizing the taxes.

Thanks again, that response has helped alot.

Sincerely,
Sharonda

Zip Code: 77056