Previous Home Status After Purchase of New Home

[Robe0965]

We bought a new home in another state at the end of 2019.  Our old home was not ready to sell so we allowed friends who were in financial difficulty to stay in the home rent free until we were ready to sell it.  Most of our furniture and other items were still in the home.  Then Covid-19 hit making it very difficult for us to get the home ready.  That combined with our advanced age ultimately caused us to decide to sell to a house flipper in 2020.   How do we characterize the time that we were not using it as a primary residence?

[ErnieS0 · Accepted solution]

You can treat that period as a second home.

You still qualify for the home sale exclusion because you 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. Topic No. 701 Sale of Your Home

You did not charge any rent so your home was not a rental property.

The IRS allows you to deduct mortgage interest and property taxes on two homes so you can claim the interest and taxes on both homes on your 2020 return.

[Robe0965]

Thanks for the great answer.  I have another related issue.  When we bought the home we now live in we also had a cabin which we also sold later in 2020.  

Sold our previous primary home in July and the Cabin in November.  At one point we owned three homes.  What does the vacation home qualify as?

Thanks again.

[HelenC12]

The vacation home is also a second home. To enter the sale of your cabin, see Where do I enter the sale of a second home, an inherited home, or land on my 2020 taxes?