A principal residence is the primary location that a person inhabits, also referred to as primary residence or main residence. It does not matter whether it is a house, apartment, trailer, or boat, as long as it is where an individual, couple, or family household lives most of the time.
In most cases, taxpayers must file taxes on capital gains from the sale of any property. However, when they sell their home of primary residence, they could qualify for an exclusion of a $250,000 ($500,000 if married filing jointly) gain if they meet the following requirements according to the IRS.
They owned the home and used it as their primary residence in at least two of the five years preceding the sale of the property.
While absences from the home for vacation or long-term medical care do not affect the standing of a principal residence, protracted lack of occupancy for other reasons may disqualify it.
If the taxpayer maintains more than one residence and divides their time on a seasonal basis between them, the dwelling they spend more time in would likely qualify as their principal residence. If the taxpayer owns one home but rents another residence they live in, the rented property would be their principal residence.
Other types of proof may be required to establish where one’s principal residence is. This can include utility bills with the occupant’s name and address, a driver’s license with the address, or a voter registration card.
See IRS Publication 523 for further information.
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