Sale of second home that was lived in for more than 24 months in the last 5 years

[snugsam]

Can you claim exclusion of profit from sale of second home that was lived in at

least 24 months for the last 5 years of ownership? Used primary address of

house that she lived in for almost 7

months each year for everything since it

was more than half a year. But how to handle the sale of the second home that she lived in for at least 24 months for the last 5 years? 

[JohnB5677]

Based on your description, yes she would qualify for the $250,000 exclusion.

If you sell your main home, and have a profit, you may qualify to exclude up to $250,000 (if single) from your income, or up to $500,000 if you file a joint return with your spouse.

You can meet the ownership and use tests during different 2-year periods. However, you must meet both tests during the 5-year period ending on the date of the sale. 

IRS Sale of home exclusion

[Mike9241]

when a taxpayer alternates between two homes, the home that is used for the majority of time during the year (only those months would count towards the 24-month requirement) will ordinarily be considered the principal residence which is the only home that qualifies for the gain exclusion REG 1.121-1(b)

[AmeliesUncle]

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@snugsam wrote:

Used primary address of house that she lived in for almost 7 months each year for everything since it

was more than half a year.

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It sounds like the 7-month house was their Principal Residence the entire time.  If that is the case, the 5-month house was never their Principal Residence and the sale is fully taxable (the $250,000/$500,000 exclusion does NOT apply).

In the event there is solid evidence that their Principal Residence repeatedly changed back and forth (which in my opinion is uncommon), then the sale will only be PARTLY taxable.  However, whenever they eventually sell the 7-month home, it will ALSO be PARTLY taxable.  Neither house would qualify to be completely tax-free because there were periods when it was NOT their Principal Residence.  However, as I said before, I suspect this situation is uncommon and therefore the 5-month home would be fully taxable.