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If you sold your Primary Residence the sale may be exempt, the home must be considered a primary residency based on Internal Revenue Service (IRS) rules.
These rules state that you must have occupied the residence for at least two of the last five years."
This is only the case to get the FULL 250,000 exclusion amount.
If you lived in the house for LESS then two years during the last five year you will still be able to deduct partial amount per how many months you did live in it during those 5 years.
According to the IRS website https://www.irs.gov/publications/p523
Here is the easy math. But the form is below as well.
You lived in the house for 6 months during the last 5 years.
6/24 x 250,000 = your exclusion amount = 62,500 as single filer. You made 70k off the sale after deducting all costs associated with the sale. = 8,500 is taxed.
| Determine the shortest of the following 3 periods: | |
| | 1. Your time of residence in the home during the 5-year period leading up to the sale | _____ |
| | 2. Your time of ownership of the home leading up to the sale | _____ |
| | 3. The time that has elapsed between the sale and the date you last sold a home for which you took the exclusion if you had done so | _____ |
| Step 2 | Take the smallest period from Step 1 (you may use days or months) and divide that number by 730 (if using days) or 24 (if using months) | _____ |
| Step 3 | Multiply the result from Step 2 by $250,000. Stop here if not married filing jointly | _____ |
| Step 4 | Repeat Steps 1–3 for your spouse and add the two results |
