Live In House 2 Years Pay No Taxes ?

I was wondering if I've understood it correctly that fact that if you live in your residence for 2 out of 5 years you can take that gain tax free. No capital gains or income taxes on this. Is this true ??

Comments(4)

  • heathermarie27th July, 2004

    Yes that is correct. The sale of a principle residence is generally not reported on a taxpayer's tax return if they owned and used the home as a principal residence for at least 2 out of the last 5 years prior to the sale. Single taxpayers can exclude up to $250,000 of gain and married taxpayers can exclude up to $500,000 of the gain. However, If the taxpayer uses an office in the home deduction, a portion of the gain may be taxable.

  • InActive_Account27th July, 2004

    I was under the impression that the exception applied even if you had just lived there for 2 of the previous 5. I will look on the irs' site. A CPA once told me that even if you had rented 1 year, then bought it, lived in it a year after that, then sold you would still qualify... Let me check

  • InActive_Account27th July, 2004

    Here is a direct quote from the IRS site...

    http://www.irs.gov/faqs/faq-kw27.html

    If, during the 5-year period ending on the date of sale, you owned the home for at least 2 years and lived in it as your main home for at least 2 years, you can exclude up to $250,000 of the gain ($500,000 on a joint return in most cases).

    So I guess that you have to have owned it for 2 years, and lived in it for 2 years, but not necessarily at the same time.

    Example: You could have rented it for 2 years from the owner, and lived in it. Then you bought the home, moved out and rented it or 2 years. You would still qualify.

    This is just my opinion, check with your CPA for more details! grin

  • InActive_Account27th July, 2004

    sry for the side note... go to section 10.1, to see the qoute, you will have to scroll down a little bit.

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