Hello, I have a client that owns an acreage which is their principle residence. Up to late 2020 they lived in a mobile home on the acreage. IN 2020 they purchased a new mobile home on the same land and moved in. They left the previous mobile in place (unused for now). Given it is on the same land, I assume they do not need to declare disposal of a principle residence? Is this correct?
They did not dispose of it so no declaration. If sold or changed to rental, then declare mkt value.
I see two possibilities. There could be a change of use on the old one and claim the principal residence. I’ve never seen a mobile home gain in value so capital gains shouldn’t be a concern.;
Thanks so much for the responses. Seems it could be a combination - when disposed, claim the exemption at that time and only for the years lived in - with likely no increase after that. The new one would start as the principle residence at the time of the move and also be sheltered. Just confusing as it is only the mobile home changing (and possibly disposed) not the land which has grown a lot in value.
Thanks again.