A Capital Gains Avoidance Strategy?
I have a lake front cottage property that my brother and I inherited from my parents 8 years ago. I bought him out for half of what it was worth at the time. Since then it has nearly tripled in value which is good, I guess. I also own and live in a home in the city and have a tenant downstairs. I would like to sell them both asap as I'm soon retiring and want to live in a warmer climate.
I would like to know, is it possible to sell my home as principle residence now and pay capital gains on my rental portion, then wait until next year to sell the cottage after living in it for awhile? Wouldn't the cottage be considered my principle residence then, since I would no longer have the city home?
I can't seem to find a straight answer and wonder if there are any pitfalls that I'm not aware of.
Thanks for any advice.