Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
caperomie
Level 1

primary residence for less than 2 year and then rented capital gain

Hi there, i have a somewhat tricky question that is baffling me and i am not able to find the answer, will try to explain here.

 

current date is 9/20/2021.

 

i have a home purchased on October 2020 which i use as a primary residence, i am also buying another home in same city which will be ready on Feb 2022 , builder is asking me to occupy the new house as primary residence for two years. here is my dates:

 

1st house purchase date = 10/2020

lived in 1st house until = 1/2022 (15 months)

moved to second house = 2/2022

lived in second house until = 2/2024

1st house rented period = 2/2022 to 2/2024 (2 years)

moved back to 1st house = 3/2024

 proposed sold date1st house = 1/2025

 

in above scenario i have only 50% gain as qualified period, please correct me if i am wrong since i didnt live in my 1st house for 2 years and rented.

2 Replies
Critter-3
Level 15

primary residence for less than 2 year and then rented capital gain

Second home ... if you live in it  for 2+ years then you can take the personal residence exclusion

 

First home ... if you live in it for 2 out of the last 5 years working back from the sale date then you can also take the personal residence exclusion if you wait 2 years from the second home's sale date.  HOWEVER  you will need to recapture the depreciation you MUST take on the home while it was a rental.   Seek local professional guidance if you still have questions on this matter.  

AmeliesUncle
Level 13

primary residence for less than 2 year and then rented capital gain


@caperomie wrote:

Hi there, i have a somewhat tricky question that is baffling me and i am not able to find the answer, will try to explain here.

 

current date is 9/20/2021.

 

i have a home purchased on October 2020 which i use as a primary residence, i am also buying another home in same city which will be ready on Feb 2022 , builder is asking me to occupy the new house as primary residence for two years. here is my dates:

 

1st house purchase date = 10/2020

lived in 1st house until = 1/2022 (15 months)

moved back to 1st house = 3/2024

 proposed sold date1st house = 1/2025

 


 

If the first home was you principal residence for at least 730 days during the 5-year period before it was sold, it will qualify for AN exclusion.  But in your situation, you only qualify for a prorated exclusion.  As you said, if it was your main home for 24 months out of a total ownership period of 48 months, you will only qualify to exclude 50% of the gain due to the "nonqualified use" during the time you did not live there (not including any gain due to depreciation, which is also taxed).

Dynamic AdsDynamic Ads
Privacy Settings
v