Capital Gain on Preconstruction
Hi I have a condo that's about to close. It was purchased 4 years ago for $400k, and is now worth $650k approximate.
If I make this my primary resident, then I don't have to pay for the capital gain appreciation when I sell.
However, if I make it as an investment property, do I have to pay the tax for capital gain of ($650k - $400k) = $250k during the construction of it?
Let's say after 5 years I plan on selling it.
Scenario 1: after close I live in it for 1 year, then rent it out for 4 years
Scenario 2: after close rent it out immediately for 4 years, then live it in for 1 year
I understand the years I rent it out I have to pay tax. But not sure how the $250k is taxable or not.
If I make this my primary resident, then I don't have to pay for the capital gain appreciation when I sell.
However, if I make it as an investment property, do I have to pay the tax for capital gain of ($650k - $400k) = $250k during the construction of it?
Let's say after 5 years I plan on selling it.
Scenario 1: after close I live in it for 1 year, then rent it out for 4 years
Scenario 2: after close rent it out immediately for 4 years, then live it in for 1 year
I understand the years I rent it out I have to pay tax. But not sure how the $250k is taxable or not.