Avoiding capital gains tax on a primary residence

Forum|Forum|2 years ago
October 25, 2023
1 reply
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I lived in home A as my primary residence for 4 years.

When I purchased home B in 2020, I rented home A for a year before I sold home A in 2022. I took the capital gains tax exemption on home A in 2022.

I have now lived in home B (as my primary residence) for 3 years. I'm considering selling home B in 2024.

The exemption says it is only available once every two years. Can I take the capital gains tax exemption on home B in 2024 after also using it in 2022? Both homes fit the independent use case but I'm not sure if the every 2 years rule means I can take the exemption again starting in 2024 or if it means 2025?

Ask the Experts - Extension - Sept 2023

nisalao18

Level 2

Thanks for joining us today. According to the IRS you may take the exclusion only once during a 2-year period. That means if you sold home A in March 2022 (For example) then the sale of home B would have to be no earlier than March 2024 for you to be able to claim the Exclusion of gain on a primary residence.

You can refer to IRS publication 523 for more details: https://www.irs.gov/publications/p523