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Home Residence Sale 2 year out of 5 year rule for gain exclusion

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    Home Residence Sale 2 year out of 5 year rule for gain exclusion

    I was wondering if anyone has run into this issue.

    In order to take the $250,000 gain exclusion, taxpayer must have lived in the home for 2 years and owned the home for 2 years out of 5 years.

    Example - Taxpayer purchases house in January 2008 and sells the house in March 2012, so that the taxpayer will satisfy both 2 year ownership and 2 years residence in the home. In January 2013, taxpayer buys a new home. If the taxpayer sells the property in exactly two years (in January 2015), can the taxpayer take the gain exclusion again or does the 5 year window prevent this because of the prior sale ?

    In effect, can a taxpayer buy and sell their primary residence every two years and qualify for the gain exclusion ?

    Thank you

    #2
    Yes, you qualify to exclude the gain once every 2 years.

    Comment


      #3
      Originally posted by Tom Morton
      Can a taxpayer buy and sell their [sic] primary residence every two years and qualify for the gain exclusion?
      Yes. (Code §121(a) and §121(b)(3)) But if the timing is close to the 2-year minimum, watch the dates very carefully.
      Roland Slugg
      "I do what I can."

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