Home Owner Occupied

[dazimi]

Hello, If an owner-occupied house is sold less than 24 months after purchase, can it be considered "home owner-occupied" for IRS tax purposes?  Thank you. 

[Critter-3]

If it is your personal primary home:

Enter your sale of your primary residence (which may require an upgrade in TurboTax), please follow these steps:

1. Once you are in your tax return (for TurboTax Online sign-in, click Here), click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
2. Next click on “Wages & Income” ("Personal Income" in TurboTax Home & Business)
3. Next click on “I’ll choose what I work on”
4. Scroll down the screen until to come to the section “Less Common Income”
5. Choose “Sale of Home (gain or loss)” and select “start’
6. You will want to use the "Easy Guide" to determine the adjusted basis on this home

Alternatively, to enter this sale of a second home in TurboTax Online or Desktop, please follow these steps:

1. Once you are in your tax return, click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
2. Next click on “Wages & Income” ("Personal Income" in TurboTax Home & Business)
3. Next click on “I’ll choose what I work on” (jump to full list)
4. Scroll down the screen until to come to the section “Investment Income”
5. Choose “Stocks, Mutual Funds, Bonds, Other” and select “start’ (or “update” is you have already worked on this section)
6. The first screen will ask if you sold any investments during the current tax year (This includes any sale of real property held as an investment property so answer “yes” to this question)
7. Since you did not receive a 1099-B, answer “no” to the 1099-B question
8. Choose type of investment you sold - select Second Home

If you sold your primary personal residence and you lived in and owned the home for at least two years in the five year period on the date of sale, you do not have to report the sale if your gains are less then the exclusion amounts of $250,000 if filing Single or $500,000 if filing Married Filing Jointly (and both lived in the home for two years).  

If you had a gain greater then the exclusion amounts then you would have to report the sale.  Also, if you received a Form 1099-S for the sale either with a gain or a loss, the sale has to be reported.  You will need the online TurboTax Premier or Self-Employed edition to report the sale if you are using the online editions.   Make sure that you indicate that you want the sale of the home reported on your tax return.  (See Screenshot)***

• Click on Federal Taxes (Personal using Home and Business)
• Click on Wages and Income (Personal Income using Home and Business)
• Click on I'll choose what I work on (if shown)
• Scroll down to Less Common Income
• On Sale of Home (gain or loss), click the start or update button

Or enter sale of home in the Search box located in the upper right of the program screen.  Click on Jump to sale of home

[rjs]

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@dazimi wrote:

If an owner-occupied house is sold less than 24 months after purchase, can it be considered "home owner-occupied" for IRS tax purposes?

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What tax purpose are you referring to? Where do you see the term "home owner-occupied" in any information or instructions from the IRS?

If you are talking about the exclusion of gain from the sale of your main home, if you sell the home less than 24 months after buying it you do not meet the ownership requirement for the exclusion of gain. To exclude the gain you have to have owned the home for at least 24 months out of the last 5 years leading up to the date of sale. Being "owner occupied" does not change the fact that you did not own the home for 24 months. You might qualify for a partial exclusion of gain if the main reason that you sold your home was a change in workplace location, a health issue, or an unforeseeable event. Otherwise you do not qualify for any exclusion of gain.

There are other requirements for the exclusion of gain besides the ownership requirement, but if you do not meet the ownership requirement, none of the other requirements matter.

See IRS Publication 523, Selling Your Home, for all the details of the exclusion, and other information related to selling your home.

If you are talking about selling a house other than your main home, there is no exclusion of gain under any circumstances. How the sale is taxed depends on what you did with the house, or how you used it, while you owned it. Did you rent it out, use it as a second home or vacation home, fix it up and flip it, or something else?

[dazimi]

Thank you RJS for your quick and clear reply despite my question was vague.  You explained, "To exclude the gain you have to have owned the home for at least 24 months out of the last 5 years leading up to the date of sale".    That was the answer to what I meant.   Thank you so much. 

[Critter-3]

The TurboTax program will cover this partial exclusion in the Sale of Home interview -

• Click on Federal Taxes
• Click on Wages and Income
• Click on I'll choose what I work on
• Scroll down to Less Common Income
• On Sale of Home (gain or loss), click on the start or update button

In reference to gains on the sale of your home where you did not live or own the home for at least two years during the five years from the date of sale, a Partial Exclusion May Be Available  -  See IRS Publication 523 Selling Your Home page 4 - http://www.irs.gov/pub/irs-pdf/p523.pdf#page=4

[Carl]

"To exclude the gain you have to have owned the home for at least 24 months out of the last 5 years leading up to the date of sale".

That is not the complete correct answer. Correctly stated, "To exclude the gain the home must have been your primary residence for at least 24 months out of the last 5 years leading up to the closing date of the sale."

[dazimi]

Thank you very much Carl for a more precise answer.  Here is my case: I purchased the home two years ago. it was the primary residence for two years.  Am I correct if  I sell the home now, I am excluded the gain. Thanks. 

[rjs]

There are actually two separate requirements, the ownership requirement and the residence requirement. You have to satisfy both requirements in order to exclude the gain.

You have to have owned the home for at least 24 months out of the last 5 years leading up to the date of sale (ownership requirement)

AND ALSO

You have to have lived in the home as your main home for at least 24 months out of the last 5 years leading up to the date of sale (residence requirement).

In addition, there are three other tests to determine your eligibility for the exclusion. Download Publication 523 and read the "Eligibility Test" section to get the details of all 5 tests. Critter-3 and I both posted links to the Publication 523 above.

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@dazimi wrote:

I purchased the home two years ago. it was the primary residence for two years.  Am I correct if  I sell the home now, I am excluded the gain.

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Yes, provided that you also satisfy the other tests. See "Eligibility Test" in Publication 523 for the details of all the requirements.