Capital Gains two out of five consecutive???
I am aware that to avoid Capital Gains the property must be your principle residence, and you must have lived in it for 2 of the past 5 years. But does the time you reside at the property need to be continuous?
If I lived in a home for two years, rented it for three, than moved back in while selling it would I be subject to capital gains? Is it legal to move back in to avoid the tax? What would a person need to do to make it their principle residence again? Would a person need to stay there a specified number of times a week?
1 Answer from Attorneys
Re: Capital Gains two out of five consecutive???
You do not need to live in the house when you sell it, as long as it was a primary residence for 2 of the past 5 years.
If it has been a rental for more than 3 years, then you would have to move into the property and re-establish it as a permanent residence. That means you cannot have another residence where your wife lives (if married) and only visit the old house.
This is a great break for homeowners, and the IRS is very strict on the rules.