What Counts as Use of Primary Residence Within 5 Years Prior to Sale?

[BostonKevin]

Hi!

Suppose I closed on the sale of our primary residence on November 30 2022.  This means that the 5 year period prior to the sale begins on November 30 2017.

On September 1, 2019, I started a new job well over 1000 miles away from this residence where I has been living since before November 30 2017.  I worked in the new location there for a year until my wife joined me on August 1 2020. The house was subsequently rented out until we sold it.

Between September 1, 2019 and August 1 2020, however, I returned to live in the house for at least 28 days.  11 days in March, 2020, 12 days in May 2020 and 5 days in October 2019. 

My question is, is my use of the house on these 3 occasions within the 5 year period before the sale of the  house taken into account? Could this use of the property count as 3 months since it took place in 3 separate months?

I do qualify for a partial exclusion, since I met the criteria. Perhaps these stays can enable me to take the full exclusion?

Thanks

Kevin

[tagteam]

See responses to your questions in the post below.

For a home sale and the exemption of sale proceeds, how is 24 months defined? For example, is it exa...

[TomD8]

The wording of the statute governing the capital gains exclusion is this:

"Gross income shall not include gain from the sale or exchange of property if, during the 5-year period ending on the date of the sale or exchange, such property has been owned and used by the taxpayer as the taxpayer’s principal residence for periods aggregating 2 years or more."

https://www.law.cornell.edu/uscode/text/26/121

If your 3 periods of use after September 1, 2019, were temporary in nature, and the house was no longer your "principal residence" after that date, then an IRS auditor would likely deny a claim of the full exclusion.

[tagteam]

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@BostonKevin wrote:

Perhaps these stays can enable me to take the full exclusion?

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I believe @Mike9241 may have indicated this in the thread I mentioned in my previous post, but the stays outlined in your post were over a three-month period but the stays were less than the entire month (e.g., 11 days in one month, 12 days in the second, and 5 days in the third month).

You cannot count those stays (for less than the entire month) as full months, which would be required to take the full exclusion.

See Section 1.121-1(c)

[BostonKevin]

Thanks for the reply.

I will not attempt to get the full exclusion.