Taxes

[Adamczyk40]

I sold my primary home in Nov 2020. I lived there for 19 years. I then moved into my secondary home in a different state that I owned for 8 years and lived there for 6 months until I sold that home and used the money to purchase my new, current home. 
Do I need to pay capital gains tax on that second home sale ?

[KochuK]

Hi Adamczyk40, thank you for joining the "Ask the Experts: Moving" special forum today.

I believe you question refers to the home sale gain exclusion: Taxpayers can exclude up to $250,000 ($500,000 if married filing a joint return) gain on the sale of a principal residence if the following eligibility tests are satisfied - Ownership test and Use test.

You lived in the "2nd home turned primary home" for 6 months. The Use test rule - The taxpayer must have used the home as his or her principal residence for at least two years out of the last five years ending on the date of sale. Therefore, you will need to pay capital gain to the state where the home is located.

There is also a "Look-Back" rule that you cannot claim the home sale gain exclusion during the 2-year period before the date of sale.

Furthermore, there is no deferral of capital gain when you used the 2nd main home sale proceeds to purchase the 3rd main home because this is personal in nature.

IRS Pub 523 Selling Your Home has great information.

https://www.irs.gov/pub/irs-pdf/p523.pdf

Hope this helps.