Do we have to pay capital gains on a home we owned for over 20 years but is now our second home? We bought a new primary home 3 years ago.

[gmbliss]

We would be making less than $250,000 with the sale of this home.

[Zbucklyo]

It depends on the precise timing of the sale and when it was no longer your primary residence.  To claim the exclusion, the home must have been your primary residence for any two of the five years prior to the sale.  Thus, if you sold it 2 years and 360 days after you moved, you'd still qualify for the exclusion, but not if it sold after 3 years and a day.

[Coleen3]

Yes, you do have to pay capital gains on the sale. The exclusion only applies if you lived in your primary residence for the two years prior to the date of sale. You haven't lived there for the past three years so it has been a second home for that time. The sale of a second home has a taxable gain.

Does Your Home Sale Qualify for Maximum Exclusion

The tax code recognizes the importance of home ownership by providing certain tax breaks when you sell your home. To qualify for these breaks, your home must meet the Eligibility Test , which is explained later.

How your sale qualifies.   Your sale qualifies for exclusion of $250,000 gain ($500,000 if married filing jointly) if all of the following requirements are met.

• You owned the home and used it as your main home during at least 2 of the last 5 years before the date of sale.
• You didn’t acquire the home through a like-kind exchange (also known as a 1031 exchange), during the past 5 years.
• You didn’t claim any exclusion for the sale of a home that occurred during a 2-year period ending on the date of the sale of the home, the gain from which you now want to exclude.

[redhog]

I meet the 2 out of 5 years rule and ownership on the sale of a second home, and will get a 1099-S from IRS. Does anyone know how I enter all this info, especially the info and/or details for the tax exclusion? 

[Critter-3]

Just follow the interview screens and make SURE to check the 1099-S box ...  

If the 1099-S was for the sale of your main home, it’s reported under Less Common Income in the Wages & Income section. Here's how to enter the form:

• Open your return.
  (To do this, sign in to TurboTax and select the blue Take me to my return button.)
• Type “sale of home” in the Search box.
• Select the “Jump to” link in the search results.
• Follow the screens to enter the info from your 1099-S.

Profits of up to $250,000 ($500,000 on a joint return) on the sale of your home may not be taxable if it was your primary residence for two of the last five years. We’ll ask you some questions about the sale of your home to see if you qualify.

[redhog]

Was NOT my main home.

[Critter-3]

Ok ...then the 2 out of 5 year rule doesn't apply ...  

Other real estate sales       

If your 1099-S wasn’t for the sale of your main home, select the option below for step-by-step instructions:

• Sale of a second home, an inherited home, or land
• Sale of a rental property
• Sale of standing timber

[Critter-3]

You said it was your primary residence for the required 2 out of 5 years prior to the sale so you DO use the primary residence sale section since it qualifies for the exclusion.    If you converted the home to a rental then you will sell it in the rental section.  

[redhog]

Ok. I think I understand now. I split my time living at two different houses. The one I sold qualifies under the 2 outa 5 rule, as would either house actually, but is reported under the primary residence section, even though I have owned the one I am living in now 100% of the time, and have owned this one longer than the one I sold. I guess I just am/was hung up on the one I sold as the second home.  I appreciate your help very much.!  

[Hal_Al]

You can only have one primary (principal) residence.  Any other is a second home.  

How to you determine that? You must apply a "facts and circumstances" test to determine which property is your main home. References:

https://www.rocketmortgage.com/learn/primary-residence#:~:text=Primary%20Residence%2C%20Defined,for%....

https://www.irs.gov/publications/p523  Which says, in part, 

 An individual has only one main home at a time. If you own and live in just one home, then that property is your main home. If you own or live in more than one home, then you must apply a "facts and circumstances" test to determine which property is your main home. While the most important factor is where you spend the most time, other factors are relevant as well. They are listed below. The more of these factors that are true of a home, the more likely that it is your main home.

• The address listed on your:

  1. U.S. Postal Service address,

  2. Voter Registration Card,

  3. Federal and state tax returns, and

  4. Driver's license or car registration.

• The home is near:

  1. Where you work,  (emphasis added)

  2. Where you bank,

  3. The residence of one or more family members, and

  4. Recreational clubs or religious organizations of which you are a member.

[redhog]

Thank You Very Much!

[Emma11]

I think so. I bought for 25,000 and sold for 40,000.

What forms in Turbotax do I use?

[AnnetteB6]

You did not say what you bought and sold, but the transaction sounds like one that would be reported as a capital sale.  Ultimately the sale is reported on Schedule D.  

Use the following steps to get started entering the information about your sale:

Where do I enter the sale of a second home, an inherited home, or land on my 2021 taxes?

@Emma11