Nonqualified Use concerning sale of home

[jandan2000]

I purchased my home May 2012 and lived in it until November 2016. At that time I rented it until I sold it in 2023.  Since it was my primary residence initially, can I take the Section 121 exception?

[DoninGA]

Since you have not lived in the home for at least two years in the 5 year period from the date of sale you are not eligible for the section 121 exclusion.

You have to report this as a sale of business property.

[jandan2000]

Will living there for the last of 5 years qualify for 100% of the exception?

[DoninGA]

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@jandan2000 wrote:

Will living there for the last of 5 years qualify for 100% of the exception?

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No.  You had to live in the home for at least two years in the 5 year period from 2018 thru 2023.  Since you had not lived in the home since 2016 you are not eligible for the exclusion.

[jandan2000]

Sorry, I didn't make myself clear.  I am willing to move back for 2 years so I will have my residency as part of the last 5 years.  The clarification I wanted was because it was my primary residence before renting it, and the 2 years I would be living in it would be the last 2 of the 5 years would I still qualify for the full exception?

Ex: Purchased in 2012, lived there until 2016, rented it until 2024, live in it until 2026 and then sell it. 

[DoninGA]

You initially posted that the property was sold in 2023.

If it has not been sold and you live in the home for at least two years (730 days) starting in 2024 then you will be eligible for the exclusion.

[AmeliesUncle]

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@jandan2000 wrote:

would I still qualify for the full exception?

Ex: Purchased in 2012, lived there until 2016, rented it until 2024, live in it until 2026 and then sell it. 

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No, approximately 8/14ths of the profit would not be excluded, plus you would pay tax on the gain due to the  depreciation while it was a rental.