@snugsam wrote:
Used primary address of house that she lived in for almost 7 months each year for everything since it
was more than half a year.
It sounds like the 7-month house was their Principal Residence the entire time. If that is the case, the 5-month house was never their Principal Residence and the sale is fully taxable (the $250,000/$500,000 exclusion does NOT apply).
In the event there is solid evidence that their Principal Residence repeatedly changed back and forth (which in my opinion is uncommon), then the sale will only be PARTLY taxable. However, whenever they eventually sell the 7-month home, it will ALSO be PARTLY taxable. Neither house would qualify to be completely tax-free because there were periods when it was NOT their Principal Residence. However, as I said before, I suspect this situation is uncommon and therefore the 5-month home would be fully taxable.
