If I owned a home more than a year, and less than two years, do I owe long or short term capital gains taxes?

Forum|Forum|3 years ago
January 3, 2023
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rjs

Level 15

If you sell a home that you owned for more than a year, the gain is long-term. It will be taxed at the rates for long-term capital gains.

You may have heard something about two years in connection with the exclusion of gain. To qualify for the full exclusion of gain you have to have owned and lived in the home for at least two years within the five years preceding the sale, among other requirements.

Opus 17

Level 15

You may know that if you owned a home more than two years, and occupied it as your main residence, you can exclude some or all of your capital gain from taxation. This rule is separate from the general rule that any property held more than one year is a long-term capital gain taxed at a lower rate. So if you owned the home more than one year but less than two years, even though you may not qualify for the exclusion, you will still receive the long-term capital gains rate.

Additionally, there are some circumstances where you may qualify for a partial exclusion even if you sell the home in less than two years. This will generally apply if you sell the home due to an unexpected financial hardship. You can read the rules about this in publication 523, starting on page 6.
https://www.irs.gov/forms-pubs/about-publication-523