If the owner named on the deed lives in the house for at least two of the last 5 years they owned it prior to the sale, they qualify for the $250K capital gains tax exclusion.
Now understand that does not mean they have to own the property for 5 years. There is no minimum on the number of years owned. There *is* a minimum on the number of years lived in as their primary residence.
So of the named property owner owned it for 25 months, thats two years and one month. So long as they lived in it for "at least" 24 months (2 years) as their primary residence, they qualify for the exclusion.
Also understand this:
- WHile we talk in months/years on this, the IRS counts days, and the look back day count starts on the closing date of the sale. The seller must have lived in the property as their primary residence for at least 730 days, of the last 1826 days they owned it. Note also that the days lived in as primary residence do not have to be consecutive either.
With it comes to non-consecutive days of having lived in the property as their primary residence, that's where the IRS looks at months. So if they moved in on say, Jan 1 and moved out on Jun 16th, they get to count the whole month of January and the whole month of June. However, if they moved out on Jun 14th, then they do not get to count one single day of the month of June.
