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posted Jan 2, 2025 7:44:52 AM

Guidance on 2/5 Rule for Capital Gains Exemptions

Hi,

I’m hoping for advice regarding the 2/5 capital gains exemption.

 

My wife and I sold a co-op in NYC in September 2024, which I owned for over 20 years. In 2018, we purchased a suburban home as an eventual primary residence and began renovations.

In May 2020, we left NYC due to COVID-19, and my wife took a job in the new location to help make ends meet. In August 2021, she became pregnant and was considered high-risk. Her care team and delivery hospital were in NYC, so we delayed selling the co-op in case we needed to stay closer to the hospital. During the pregnancy and delivery, we only use the apartment infrequently.

 

Do we have any recourse for claiming the 2/5 exemption, in part or full?


Thank you.

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1 Replies
Level 15
Jan 2, 2025 8:02:08 AM

Sorry, no.  By your own story, the co-op stopped being your "principal residence" in 2020.  When you have two homes, only one can be your main home.  Whether the second home is kept for use as a vacation home, or for convenience when visiting the big city on business, or as a place to stay in case of medical emergency, it is not your main home and doesn't qualify for the exclusion.