Sold two primary residences in one year. Capital Gains tax zero?

[brossyg]

I owned a house 20+ years and then bought a condo three years ago (divorce situation). In 2023, I moved out of state and sold both the house and the condo. They were both primary residences for the 2 out of 5-year look-back period. I have gains in both sales, but together they total less than $250,000. I am single.  TuboTax seems to be treating the gains with zero tax ... I guess since the total is less than $250,000??? Can I apply the $250,000 exclusion to both sales since the total is less than $250,000 (So, TurboTax is computing it correctly), or can I only shield the sale of one of the residences from capital gains tax?

[Mike9241]

the first home had to be unused for at least 2 years in that 5 years. Did it just sit empty for 3 years?  if yes the first house uses enough of the home sale exclusion to avoid any gain the rest goes to the second. Yes, both can qualify. The total for both can't exceed $250,000. Just want to make sure that nothing was going on with either property that might affect the HSE. 

[brossyg]

My ex-wife had use of the first home for the 2.5 years after 11/2020, so not empty, but it was not my primary residence during that period per court agreement. It was my primary residence before then for two years. The first house was owned equally, so my gain on the sale in 2023 is on half of the house sale minus half of the adjusted basis. I also sold my 100% owned condo in 2023, which was my primary residence after 11/2020 for two years before it was sold.

So what you are saying is that I can sell two homes in the same year and I get a TOTAL exclusion of $250,000 for the two sales as long as both served as my primary residence for 2 out of the past five years. So, the exclusion of $250,000 is per taxpayer, and not for only one sale every two years?

[TomD8 · Accepted solution]

Here's the IRS rule:

"Generally, you're not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home."

https://www.irs.gov/taxtopics/tc701

So you can't use the exclusion on both of two homes sold during the same tax year.  You can only use it on the first home sold.