Switch Primary Residence, Home Sale in Different State, Capital Gain Exclusion

[maylh]

Here is my situation. My wife works in TX and I work in VA. We have filed the tax jointly. We sold our home in TX in 2023 where we stayed there for 11 years and move to another property in the same city. I understand we qualified for the capital gain exclusion of 500k in 2023. We have a condo in VA where I stay most of the time (I work in VA). If I sell this condo in 2024, can we switch the primary residence from TX to this VA condo and claim the tax benefit?

[Bsch4477]

You must not have sold a home in the last two years and claimed the capital gains tax exclusion to get an additional exclusion. 

[Mike9241]

There are two tests for the full $500K exclusion. either must own it for 2 out of 5 years before sale but both must occupy it for 2 out of 5 years before sale. these rules apply in community property states like Texas. 

Occupancy Requirements:

• To meet the primary residence test, you must dwell in the property for the majority of the year.
• The IRS considers factors such as how long you’ve lived in the home and whether it’s your fixed address.

[maylh]

Thanks for the prompt response.

The property we sold in TX in 2023 had a capital gain of appr. 400k where my wife stayed for 11 years and I stayed for 5 years. The condo I plan to sell in VA this year (2024) is estimated to have a gain of 80k. I have stayed in this condo for 6 years now. The total will be 480k, less than 500k. It seems to OK, right?

[Bsch4477]

You can’t use the exclusion for the condo since you already used an exclusion the previous year.