Maried couple want to qualify two residences for exclusion

[LCP]

Anybody have any quick feedback on the concept of a married couple living in separate homes for two years in order to qualify an existing rental property as a personal residence eligable for a $250k exclusion?

[Bees Knees]

Living in separate homes. Yes, that can be done. Each lives in a separate home, excludes $250,000 on their principal residence, and then uses the tax savings to help pay for the divorce.

[OldJack]

And you best have proof of time living in each home as I would expect it to be audited.

[jimmcg]

Had a similar situation a few years back and as Old Jack warned it did get audited. Client survived the audit as we had documented in advance separate addresses with drivers license, auto registration, voter registration, post office notificatons,etc. but needless to say the Service was a tad skeptical. Get as much documentation as possible set up in advance and even then there are no guaranties it will pass muster!

[LCP]

Thanks for the responses .....

Am I correct that if each property is owned jointly, only 1/2 of the gain on each is going to be excludable?

See any reason why the properties couldn't be exchanged for one another and become individually owned by the individual who is going to make it their main home?