2-year rule on selling two primary residences

[howjltx1]

Looking back at my two primary home sales, I sold my first Florida primary residence on 31 May 2019 and took part of the $500K exclusion a 1099-S was filed. I see on 31 May 2023 I sold my next Georgia primary residence (at closing I was told no 1099-S was required), can I claim another exclusion or does it have to be more than exactly 2 years? 

[Vanessa A · Accepted solution]

May of 2019 to May of 2023 is 4 years, so you are greater out than 2 years since your last home sale exclusion. 

 If you owned and lived in the home for 2 out of the last 5 years, then you may qualify for the home sale exclusion which would exclude up to $250k ($500k if married filing jointly) of the sale of your home.  In order to qualify you must not have used the home sale exclusion in the past 2 years.  Since you are at 4 years, you would meet the criteria for not having sold a home in the past 2 years and taken the exclusion.  

[howjltx1]

My mistake, I sold the Florida primary residence on 31 May 2021 and then the Georgia primary residence on 31 May 2023. So this is exactly two years apart.

[dmertz · Accepted solution]

May 31, 2021 is (just) outside the 2-year period ending on May 31, 2023, so claiming the exclusion on the May 31, 2023 sale is not barred by the once-every-two-years limitation.  Had the sale taken place on May 30, 2023, claiming the exclusion would not be permitted.

Section 121(b)(3) Application to only 1 sale or exchange every 2 years

Subsection (a) shall not apply to any sale or exchange by the taxpayer if, during the 2-year period ending on the date of such sale or exchange, there was any other sale or exchange by the taxpayer to which subsection (a) applied.

(Subsection (a) is the exclusion.)