Capital gains

Forum|Forum|4 years ago
August 22, 2022
9 replies
66 views

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?

Not A Product Question

Best answer by Anonymous_

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.

Anonymous_Answer

Level 15

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.

JessabAuthor

Level 2

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?

Anonymous_

Level 15

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.