See post 111 where the exemption requires that the home be the taxpayer's principal residence and post 112 wher principal residence is defined. Also see below.
Treasury regulations section 1.121-1(b)(2) requires an examination of all facts and circumstances to determine a taxpayer’s principal residence. The regulation says the property a taxpayer used the majority of time during a year will ordinarily be considered his or her principal residence. In addition to usage, other factors include the (1) taxpayer’s place of employment, (2) location of family members, (3) address listed on tax returns, voter registration, driver’s license and vehicle registration, (4) taxpayer’s mailing address, (5) location of the taxpayer’s banks and (6) location of religious organizations and recreation groups.
From the IRS reg:
(2) Principal residence. In the case of a
taxpayer using more than one property
as a residence, whether property is
used by the taxpayer as the taxpayer’s
principal residence depends upon all
the facts and circumstances. If a taxpayer
alternates between 2 properties,
using each as a residence for successive
periods of time, the property that the
taxpayer uses a majority of the time
during the year ordinarily will be considered
the taxpayer’s principal residence.
In addition to the taxpayer’s use
of the property, relevant factors in determining
a taxpayer’s principal residence,
include, but are not limited to—
(i) The taxpayer’s place of employment;
(ii) The principal place of abode of
the taxpayer’s family members;
(iii) The address listed on the taxpayer’s
federal and state tax returns,
driver’s license, automobile registration,
and voter registration card;
(iv) The taxpayer’s mailing address
for bills and correspondence;
(v) The location of the taxpayer’s
banks; and
(vi) The location of religious organizations
and recreational clubs with
which the taxpayer is affiliated.
