To claim the ($250k/$500k) exclusion, you must meet the ownership and use tests. This means that during the 5-year period ending on the date of the sale, you must have:
Owned the home for at least two years (ownership test), and
Lived in the home as your main home for at least 2 years (the use test).
best creative techniques for personal residence - Posted by Lin (NC)
Posted by Lin (NC) on February 15, 2011 at 13:22:25:
I’m looking for a personal residence and think I should definitely be able to get a deal in this market that’s still declining. I’m looking for a 3000+ sf home in a desirable area priced $400k - $600k in a market where the median is about $160k. I’ve purchased commercial and multifamily but have yet to really get much of a deal on the house I live in.
What have others done to get themselves are fantastic deal on their own home?
Posted by Lin (NC) on February 16, 2011 at 14:55:15:
Somebody correct me if I’m wrong here, but the 3 of the last 5 years John Little refers to applies to a rental or second home turned into a personal residence. If you purchase a residence and then sell every two years you’re entitled to the exclusion of $250k for taxpayers filing single, and $500k for those filing joint returns.
Posted by Dave T on February 20, 2011 at 22:11:56:
You are wrong.
The rental turned into a principal residence has special rules for determining how much of your capital gain can be excluded under Sec 121, but the basic Sec 121 qualification test for a property purchased as a principal residence is the two of last five year rule.