@manchotroyal , having read through the opinions of my colleagues @AmeliesUncle , @Opus 17 and @Mike9241 and generally agreeing with the statements, I am still confused as to the exact facts . So I will first state the situation as I understand :
1. A & B , a married couple and filing jointly, bought property in P1 in 2012 ( 10 years ago );
2. They both used this as their main home till 2019 .
3. They acquired a second property -- P2 in 2019 for use a main home of B while working in the vicinity.
4. Assuming that A continued to use property P1 as main home through present while B used the P2 as the main home till 2021.
5. In 2021, year end, A & B sold property P2 , for a profit and chose to exclude the "small "profit ' -- as the main home of person B, while filing jointly.
6. Person B now has moved back to Property P1 and both A & B continue to use the property as main home
7. In early 2023, ( much short of required 2 years separation between gain exclusions ), because of employment changes ( > than 50 miles move ), A & B decided to sell the property P1.
Question now is what steps can they take to claim maximum / full exclusion of gains -- up to 500,000. Should / could they amend the earlier 2021 return to change " main home" recognition for the Property P2 ?
Could you please confirm that the above scenario essentially describes the facts as they stand today ? Have you already sold the property P1 or are just considering sale ?
My initial struggle is how to avoid perjury implications -- I say this because in my view a claim of use i.e. used as second home or main home is mostly not a choice / election -- it is a fact. You either used it as your main home or you did not . Of course there are nuances to this . Having claimed the property as you main home ( especially if for both Spouses ) and now changing that this was not so -- is either a new perjury or an old perjury ).
Therefore I am asking for more information. And also perhaps you need professional tax advice with all facts laid out.
May be other have different opinion on this .
I will await your answers and circle back .
pk
