When you sell your home, you don’t have to pay capital gains tax on the first $250,000 for a single homeowner and $500,000 for a married couple. But if you rent out the full basement, you may be able to claim only one-half the deduction because the other half is a commercial property.
However, you can get around this problem by converting the apartment back into a single-family home before you sell. To qualify for the full exemption, owners must occupy 100 percent of the house for two of the five years before the sale. However, this doesn’t necessarily apply to an apartment that a family member lives in. In other words, if you have an apartment and are intending to sell, you’ll need to look ahead and do some planning.
Before you rent out your home, check with a tax professional to make sure it’s in your best interests.
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