Primary Residence Capital Gain Tax
Hi, I open the escrow for my current residence in April 2003 and the escrow was not closed until December 2003 due to the probate process. I moved in on May 1st, 2003 on a leasing contract with the ex-owner and offically owned the place in December 2003.
Therefore, I have been living here since May 1st 2003.
Question:
I am thinking about selling it in May 2005. Do I filfull the requirements of occupying the residence for two years and avoid paying for taxes of the capital gain? Or do I have to wait till December 2005 to sell it, in which way I will be owning this place for 2 full years and have occupied it as primary residence for more than 2 years.
Thank you in advance.
You need to own & occupy the residence for a total of two years. So, you would meet the ownership part of the test after 12/05 and, by then, you will have also met the occupancy test.
Thanks a lot for the reply.
Some indicated that as long as the leasing contract is a lease with option to buy, the renting period counts as part of 2-year occupancy. Nevertheless, your reply pointed out that both ownership and occupancy tests need to be satisfied.
Your response is very helpful. Thank you again.