Selling two houses?

[BUM]

The topic "Own two houses?" inspired me to ask what I thought was a simple question? How does one take the max allowable deduction of $500,000 when selling two homes?


I downloaded and read IRS pub. 523 and confess I still don't get it. To qualify the home must be your primary residence for 2 of the past 5 years, ok. But say I want to sell my primary in NY. I establish residency in NC, say today. Two years down the road can I sell both houses as primary residences?

The IRS pub. says you can only sell a primary residence every 2 years. Does that mean if I sell the NY house 2 years from now, that the clock restarts for the NC house?

My got-rich-quick neighbor sold his old beach house for a zillion dollars and moved inland and built a mansion. Same guy got-poor-quick when he found out last week his capital gains were astonomical. His beach house didn't meet the critera to be a primary residence. Dumb move.

 

[tomz]

We are in a similar situation.  As I understand it, you can only have one primary residence at a time.  After you sell your primary residence, you have to wait 2 years to sell your next primary residence if you want to avoid capital gains tax. 

The IRS pub. says you can only sell a primary residence every 2 years. Does that mean if I sell the NY house 2 years from now, that the clock restarts for the NC house?

If you sell your NY house 2 years from now and still have the NC house, you will have to wait 2 years before selling your NC house.

I am not an accountant, nor did I sleep at a Holiday Inn Express, but that is the way it was explained to me.

 

[KB]

I understand it the way Tomz does.

But if you sell your primary now and move into the other house, you can sell the other one 2 years after you sell the first house.

 

[Nords]

But if you sell your primary now and move into the other house, you can sell the other one 2 years after you sell the first house. 

The key to the tax-free cap gains is that you have to live in the house for two years before selling it.

I think that the legislative tax break is a primary cause of the rapid rise in RE values. I'll bet that many of today's sellers were previously waiting until they were older than the qualifying age, and I doubt that many of today's flippers would even have considered the idea in the days before they had a reasonable chance to avoid cap gains altogether.

 

[Martha]

Yah, Tom has it right.

It is a two part rule. (1) You have to live in the home for 2 of the past five years. (2) You can only shelter gain from the sale of a home once every two years.

Page 16 of pub 523.

 

[BUM]

poopies.