MA resident, but sold my First House in RI

[abhinavgautam]

Both my wife and I are Massachusetts residents. I worked in Mass with a Mass home address. And we as Married Jointly.

However, before moving to MA I used to live in RI and that's where I bought my first home. My wife also used to live in that house for most of the time. I sold that house in September 2021. Understandably RI sales tax was withheld. But would I qualify for any state or federal tax credits for selling my first home? Or would I be subject to standard federal taxation on real estate sales?

[RobertB4444 · Accepted solution]

If the house in Rhode Island was your primary residence for at least two years before you sold it then you can exclude $500,000 in profit on the sale of that home from your federal taxes.

Here's the IRS treatment on that.

[abhinavgautam]

Do the 2 years include any time it was my primary residence from the time I bought it to the time I became a MA resident?

[JohnB5677]

The two years do not have to be contiguous, but they do have to be included within a five-year period from the date of sale.