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Jessab
New Member

Capital gains

Hey there, 

We bought our home in CO on sept 30th 2020. We now have a closing date of voter 3rd 2022. This last month of September we were hoping to go to kc and job hunt and house hunt and stay with family. All out belongs would stay in Co and my husband would come back before closing to get all our belongings. Would we still be  from capital gains? 

1 Best answer

Accepted Solutions
tagteam
Level 15

Capital gains

Can you clarify the closing date? Is it October 3rd (or later)?

 

See https://www.irs.gov/taxtopics/tc701

 

You may qualify to exclude up to $500,000 of gain if you file a joint return with your spouse.

 

You're eligible for the exclusion if you have owned and used your home as your main home for a period aggregating at least two years out of the five years prior to its date of sale.

 

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9 Replies
tagteam
Level 15

Capital gains

Can you clarify the closing date? Is it October 3rd (or later)?

 

See https://www.irs.gov/taxtopics/tc701

 

You may qualify to exclude up to $500,000 of gain if you file a joint return with your spouse.

 

You're eligible for the exclusion if you have owned and used your home as your main home for a period aggregating at least two years out of the five years prior to its date of sale.

 

Jessab
New Member

Capital gains

We closed of the home September 30th 2020 and now our closing date is October 3rd 2022. We have consistently lived in the house the last two years but will be going to Kansas City the month of September without our belongings to find a home and job. Will that subtract from the two years?

NCperson
Level 15

Capital gains

@Jessab - temporary absences (vacations, etc.) still count as days living at your permanent home.  So the fact that you are staying with relatives while house-hunting still count as days living in CO in your home.....

Opus 17
Level 15

Capital gains

The home must be your “main home“ for at least two years, or 730 days.  Most of the time, being away from the home on a temporary basis while you are transient or itinerantly looking for jobs or a new home will not stop that house from being your “main home”.

 

Separately, there is a tax concept called domicile. Your domicile is your real and permanent home, it is where you have the strongest connections such as jobs, voter registration, vehicle registration, doctors, dentists, children’s schools, social activities, your church, and everything else. There is no single factor that determines where your domicile is, it is a combination of all factors. In order to change your domicile, you must not only establish a new domicile but you must also take active steps to abandon your previous domicile.

 

main home and domicile are not exactly the same thing, although they are related.  I can imagine a situation where, if you took a new lease of an apartment effective September 1 and a new job effective September 2, and you started getting your mail in your new city, that could be considered changing your “main home“ for the exclusion, even though you probably will not be considered to change your domicile until you complete the sale of the old home.  So the two concepts do not exactly overlap.

 

However in your situation, where you are talking about being itinerant or transient, and keeping your possessions at your original house, I would be comfortable saying that you are still using it as your main home.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
tagteam
Level 15

Capital gains


@Opus 17 wrote:

Separately, there is a tax concept called domicile.......There is no single factor that determines where your domicile....


Domicile is a legal concept and is based upon one factor; intent.

 

Domicile is the place where you live (or have lived) and where you intend to return whenever you are absent therefrom.

Opus 17
Level 15

Capital gains


@tagteam wrote:

@Opus 17 wrote:

Separately, there is a tax concept called domicile.......There is no single factor that determines where your domicile....


Domicile is a legal concept and is based upon one factor; intent.

 

Domicile is the place where you live (or have lived) and where you intend to return whenever you are absent therefrom.


If a taxing authority is trying to determine where someone is domiciled (such as a state that wants to assess residential income tax), they will apply a multi-factor test such as I have suggested, because thankfully they can't actually read taxpayes' minds (yet). See for example page 40 of the NYS income tax filing instructions, which uses 1190 words to discuss residency and domicile.  

https://www.tax.ny.gov/pdf/current_forms/it/it201i.pdf

 

In this case, the intent of the taxpayer is to change their "principal residence"; the question is, will they have in fact changed their principal residence before Sept 30, 2022.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
tagteam
Level 15

Capital gains


@Opus 17 wrote:
......which uses 1190 words to discuss residency and domicile.  

Domicile is a legal concept. Since you never attended law school, you never learned the difference between the two.

Opus 17
Level 15

Capital gains


@tagteam wrote:

@Opus 17 wrote:
......which uses 1190 words to discuss residency and domicile.  

Domicile is a legal concept. Since you never attended law school, you never learned the difference between the two.


I don't see why it is necessary for you to nitpick on a tangent and insult me as well.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
tagteam
Level 15

Capital gains


@Opus 17 wrote:
I don't see why it is necessary for you to nitpick on a tangent and insult me as well.

From my perspective, it is you who is doing the nitpicking (in multiple threads), adding useless and irrelevant information to threads that have already been sufficiently answered, and who, apparently, is some sort of wannabe lawyer or tax professional (of which you are neither).

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