Selling two primary homes in one year

[ColdLife]

 I know I did something stupid in what I did here, but I am trying to understand the tax law here. Long story short. My first house I have lived in for the past 14 years. I moved to change jobs and bought a new home in that location. Then sold my first home for a gain of ~100k. I bought the second home just to get me in the area of my new job. We found our hopefully forever home and bought it (Home three). We then sold home two all in the same year as we sold home one for a gain of ~50k (market is crazy). I know I have to pay full capital gains on home two and have no problem with that reality. My tax accountant is convinced that the capital gains from home one affects the basis for home two so our capital gains on home two is ~130k instead of ~50k. I am not finding any rules that talk about this being the case. I've read through Pubs 530 and 523 and am still not getting what my accountant is talking about. I need some help understanding what he is talking about and the law behind it.

[ColeenD3]

No. Each sale is separate. He may be thinking of a 1031 exchange, but you did not exchange. You bought and sold two personal homes. 

[Mike9241 · Accepted solution]

you can't do a 1031 exchange on a personal residence.  also, don't forget to take into account closing and selling costs for each residence.

ask your accountant what code section he's talking about, because there isn't one.

[ColdLife]

Thanks, I have asked my accountant where it is. I've scrubbed through pubs 530 and 523 and can't find any reference for adjusting the basis of a house based on the previous one. I think you are all right that it doesn't exist. Sad thing is it sounds like the accountant has been applying this to people for years. If it is what it is so be it, but I sure can't find it.

[ColdLife]

So my accountant got back to me. Sure enough he admitted to getting things wrong. Apparently their software still has things back from Form 2119 days and it screwed up all the calculations. Thanks for the help.