about primary residence for Publication 523

[frank790628]

Hi 

IRS primary residence definition is vague. I am finding hard time find out my the last date of primary residence for Publication 523 tax exclusion. I purchased my pervious place in 2018 and current place in 2021. I changed my USPS address on May/2021 and told county that my previous home was not my primary residence on June/2021. However, I actually moved out on October/2021. I like to sell my previous place now. If my last date of primary residence of previous place is on October/2021. It is likely that I can meet 2/5 rule.  If not, I am running out of time to sell. I have photos to prove that my previous place was not suitable for living due to remodeling. However, I don't know how to prove that to IRS

My timeline is like below. 

2018 May: Purchased home A

2021 March: Purchased home B

2021 May: submit re-modeling permit for home B (kitchen and bathrooms)

2021 May: Move USPS address to home B

2021 June: Submit application to home A county that home A was no longer my primary residence

2021 July: re-modeling permit for home B was approved

2021 October: moved into home B

2021 November:re-modeling permit is closed

2022 March: Rented out home A

2024 May: Plan to sell home A

[pk]

@frank790628 , assuming  that what you are trying to achieve is  to avail yourself of the main-residence exclusion of capital gain from taxation  ( $250,000 for each qualified filer).

The requirements  for this are :     (a)   Ownership  -- at least one filer  ( for a joint return ) must have  owned the property  for two years;       (b)   Qualified Use --- each  filer must have used the property as his/her main residence  for a total of 730 days during the past five years  ( starting with the  date of sale  "closing" );   (c)  Time Limit ----  filers must not have used this exclusion during the last tow years  ( starting from the date of sale of the asset ).

Given the above  I do not understand your worry.  

As I see it , for property A ( bought in 2018 )     (1)   satisfies the ownership (  will be more than 2 years required )  ;    (2)  satisfies the USE requirement  (  sell in 2024, have been using as main residence for 730 days  during the intervening 5 years i.e. 2 years met  within a  five year window of 2024  and 2019 )  ;    (3)  you have not sold another main home during 2024 and 2022.

Does this make  sense ?

Is there more I can do for you ?

[frank790628]

Thanks for the reply. 

Yes. I am wondering whether I satisfy the exclusion of capital gain from taxation.

I moved out from the previous place on October 2021. However, I changed my USPS address on May 2021 and told county my previous was no longer my primary residence on June 2021. 

If IRS consider May/June 2021 is my last date of using my previous address as primary residence. I wouldn't meet the 2/5 year rule after May/June 2024. 

I am curious how do I prove to IRS that I actually moved our on October 2021. Therefore, I still have time to sell the house before October 2024.

[rjs]

You don't have to prove anything to the IRS when you file your tax return. You just report the sale and take the exclusion. You only report the dates of purchase and sale, and the cost and selling price. You don't report the dates of residence or the date you moved. You would only have to prove that you met the residence requirement if you got audited.

If your gain is $250,000 or less, you might be able to sign a form at the closing of the sale certifying that you qualify to exclude the entire gain. Then the closing attorney or agent won't issue a Form 1099-S, and you won't even have to report the sale on your tax return.

I don't know what kind of proof the IRS would require in the unlikely event that you got audited, but I think that having some evidence of when you actually moved would be a big help. How did you move your furniture? If you used a moving company, do you have a contract or receipt? If you rented a truck, do you have a record of the rental? If necessary, you could also ask neighbors of either house for a letter saying when you lived there or when you moved.

[Hal_Al]

Why did you do a USPS address change before you actually moved?

What is "application to home A county that home A was no longer my primary residence" all about? I assume some sort of real estate tax reduction for primary residence.