We built a new home in 2010-- 10 miles from our first home, which we had lived in for over 25 years. Our first home has been vacant since we moved out. We put it up for sale in May, 2013, and have a buyer. The closing *should* take place mid to late July.
My question is concerning the Capital Gains exclusion for sale of your main home. What dates will the IRS look at to determine if we meet the "2 out of 5 year" requirement? Pinpointing exactly what date we officially moved into our new home may be difficult, because we moved all our furniture ourselves over a period of weeks, etc.. Will the IRS look at a specific date to determine whether we lived there 2 out of 5 years, or does the IRS look at it based on actual years? For instance, the old home definitely was our primary residence in 2009, and we lived there for 7 months of 2010-- so would that qualify us for the "2 years", or will they look at more specific dates (for instance-- moved out on July 29, so must sell by July 29, etc)?
From the IRS webpage, 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 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---
Taxpayer's place of employment; The principal place of abode of the taxpayer's family members; The address listed on the taxpayer's federal and state tax
returns, driver's license, automobile registration, and voter registration card; The taxpayer's mailing address for bills and correspondence; The location of the taxpayer's banks; and The location of religious organizations and recreational clubs with which the taxpayer is affiliated.
Since our 2 properties are both located in the same area--(same state, same county, same postal area), etc,-- do you think that we will need additional proof of "main home" and do you have any ideas on what the IRS might accept as proof? We stayed at the same bank, and changed our addresses on our various accounts over a period of a month or two. We, again, did not rent the home--- ever--- and we have proof of homeowner's insurance for the entire period-- until last year when we switched to a Vacant home policy.
My question is concerning the Capital Gains exclusion for sale of your main home. What dates will the IRS look at to determine if we meet the "2 out of 5 year" requirement? Pinpointing exactly what date we officially moved into our new home may be difficult, because we moved all our furniture ourselves over a period of weeks, etc.. Will the IRS look at a specific date to determine whether we lived there 2 out of 5 years, or does the IRS look at it based on actual years? For instance, the old home definitely was our primary residence in 2009, and we lived there for 7 months of 2010-- so would that qualify us for the "2 years", or will they look at more specific dates (for instance-- moved out on July 29, so must sell by July 29, etc)?
From the IRS webpage, 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 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---
Taxpayer's place of employment; The principal place of abode of the taxpayer's family members; The address listed on the taxpayer's federal and state tax
returns, driver's license, automobile registration, and voter registration card; The taxpayer's mailing address for bills and correspondence; The location of the taxpayer's banks; and The location of religious organizations and recreational clubs with which the taxpayer is affiliated.
Since our 2 properties are both located in the same area--(same state, same county, same postal area), etc,-- do you think that we will need additional proof of "main home" and do you have any ideas on what the IRS might accept as proof? We stayed at the same bank, and changed our addresses on our various accounts over a period of a month or two. We, again, did not rent the home--- ever--- and we have proof of homeowner's insurance for the entire period-- until last year when we switched to a Vacant home policy.
