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Avoiding capital gain on two sales
Kindly help with this scenario, I am getting a bit nervous about this:
- I purchased a home on May 24, 2021 and it became my primary residency immediately (as in, we moved in that day)
- I sold my prior property Jul 30, 2021 (it remained unoccupied after move-out). I gained ~150K capital gain after living in 5 years. Did not get taxed on it.
- I am now purchasing a home on another state with closing date Mar 6, 2023 but it will remain unoccupied until at least May 25, 2023 which is when I am hoping to close on the current property. I will have capital gains on this sale but < 500K.
Is this a scenario that automatically prevents me from getting taxed on capital gains? I will have lived at this current property for 2 years and 1 day on closing. But is the reporting of primary residency an honor system? That's what makes me nervous and can't seem to find an answer. I wouldn't have anything to show primary residency on May 24, 2021 other than some texts to the family because there is certainly a delay of weeks in filing for the primary property tax exemption (homestead). And does the sale of my prior property interfere at all with this 2-year-1-day calculation? Thanks for your help!