☰
✕
Sign In

Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
Level 1
posted Apr 25, 2021 6:47:03 AM

Can I use the capital gains exclusion if bought the home from a renter? We have lived here for over 3 years but only owned it officially for 2 years.

My mother in law purchased a home for us to rent from her. We later bought it from her offically. We've lived at this residence for 3 years, and have owned it for 2. We rented it out the last few months of ownership. Can we claim the year prior to owning as the residency exclusion on capital gains?

0 2 554
2 Replies
Level 15
Apr 25, 2021 8:30:16 AM

To qualify for the capital gains exclusion, you must have owned the home and lived in it as your primary residence for at least two of the five years leading up to the date of sale.

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

Level 15
Apr 25, 2021 8:45:59 AM

@cris_m21 wrote:
Can we claim the year prior to owning as the residency exclusion on capital gains?

Yes, you can. The IRS page that TomD8 referenced says "You can meet the ownership and use tests during different 2-year periods."