: Taxes on selling a house I rented I paid 0,000 for a house in 2007. I lived there until 3 years ago, at which point I rented it out because the real estate market was not good. Now, it is able to be sold for 0,000

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Taxes on selling a house I rented
I paid 0,000 for a house in 2007. I lived there until 3 years ago, at which point I rented it out because the real estate market was not good. Now, it is able to be sold for 0,000

I understand that if I sold the house and had lived there 2 of the last 5 years, then I would avoid paying capital gains tax on the sale, is this correct?

To complicate matters, my tenants have started acting bad, and I let their contract expire. Due to coronavirus, they asked for an extension to the lease for a month, but I only gave them 1 week, because if I get to next month, I would not have lived in the house for 2 out of the last 5 years. They are now asking for another extension, however, have put themselves in a bad spot by violating lease agreements, etc which is why I did not renew their lease to start with (I considered continuing to lease the property, but have decided it is a good time to sell in that market).

If I have to go through an eviction process which could take months, will this cause me to have to pay additional taxes on the property after a sale? Should I extend the lease to ensure I keep at least receiving payment while they are there? They have never missed a payment so far. This is in the United States.

here is what turbotax says about the tax advantage of selling for less than 0,000 in profit:

How do I qualify for this tax break?

There are three tests you must meet in order to treat the gain from the sale of your main home as tax-free:


Ownership: You must have owned the home for at least two years (730 days or 24 full months) during the five years prior to the date
of your sale. It doesn't have to be continuous, nor does it have to be
the two years immediately preceding the sale. If you lived in a house
for a decade as your primary residence, then rented it out for two
years prior to the sale, for example, you would still qualify under
this test.
Use: You must have used the home you are selling as your principal residence for at least two of the five years prior to the
date of sale.
Timing: You have not excluded the gain on the sale of another home within two years prior to this sale.

As of right now, I think I pass this test. I have owned the home for a decade and rented it the last 3 years. It was my primary residence two of the last 5 years (the first two), and I have not taking the gain on anyo other home.

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