Sale of home

[Insignia]

Do I qualify for the 250/500 rule of tax exception for selling a home if I lived and owned that property for only 4 1/2 years before selling it?

[DoninGA]

If you sold your primary personal residence and you lived in and owned the home for at least two years in the five year period on the date of sale, you do not have to report the sale if your gains are less then the exclusion amounts of $250,000 if filing Single or $500,000 if filing Married Filing Jointly (and both lived in the home for two years).

If you had a gain greater then the exclusion amounts then you would have to report the sale. Also, if you received a Form 1099-S for the sale either with a gain or a loss, the sale has to be reported.

[marctu · Accepted solution]

So the key here is that you lived in the house for at least 730 days or 24 full months during the five years prior to the date of your sale.  You can own the home for less then five years and up to $250,000 of profit is tax-free (or up to $500,000 if you are married and file a joint return. 

You qualify for the tax break if you meet all three of these tests:

• Ownership: You must have owned the home for at least two years (730 days or 24 full months) during the five years prior to the date of your sale.  It doesn't have to be continuous, nor does it have to be the two years immediately preceding the sale. If you lived in a house for a decade as your primary residence, then rented it out for two years prior to the sale, for example, you would still qualify under this test.
• Use: You must have used the home you are selling as your principal residence for at least two of the five years prior to the date of sale.
• Timing: You have not excluded the gain on the sale of another home within two years prior to this sale.

[Insignia]

Dear Mr Marctu

So my brother purchased a house in 2012 and I went to live with him in 2012 on that property. After 2017 my brother moved to another state and in 2017 my brother gifted his house to my mom and my mom gifted it to me the same year. I recently sold the home and I do not know if I am suppose to register for taxes the price my brother payed for the home in 2012 or when my mom passed it to me on the fair market value in 2017. If it is 2017 FMV do I just take zillow FMV chart of what it was and print it out and submit that with my taxes this year or just submit the FMV price of what it would have been in 2017 online without the paper to show it?