Primary Residence Profit Exemption
If someone lives in a house for 2 years, but is not the owner, then they purchase it and sell, do they get the $250k exemption?
I've yet to read anything that says otherwise, just that they must have lived there for 2 out of the last 5 years... It would seem to me that if someone rented a house for two years, then purchased it, and sold it on a L/O that was executed 2 yrs down the road, they would qualify. Am I missing anything?
You must own the real property AND live in it for at least 24 months out of the last 60 months in order to qualify for the Section 121 exclusion. Simply renting it will not qualify under Section 121.
Hi Student,
I am no tax expert, but I believe the deal would qualify for the tax exemption. I have read somewhere that the 2 years you own in and the 2 years you live in it do NOT have to be the same.
----------------Moderator Note ------------------
Achab,
You are correct, you are no tax expert. The suggested timeline does not qualify for the capital gains exclusion. You are correct that the two years of OWNERSHIP and the two years of OCCUPANCY do not have to be concurrent, but both conditions must be met during the five years prior to the sale to qualify for the capital gains exclusion.[ Edited by DaveT on Date 05/24/2004 ]
OK, so I wasn't aware of the requirement to OWN for 2 years... only to live there for 2 years. Even so, it would seem that if you rented for two years, then purchased it and sold it on L/0 executed two more years down the road that it would qualify... after all, it was owned for 2/4 and it was primary for 2/4, so both are met, right?
Quote:after all, it was owned for 2/4 and it was primary for 2/4, so both are met, right?thestudentisready,
Correct, provided the tenant buyer does not exercise before you have two years of ownership under your belt.