I had a friend ask a question related to the capital gain exclusion on the sale of a primary residence. Currently you must live in the residence 2 out of 5 years for eligibility. As I understand it, this will change on 1/1/18 to where you must live in the primary residence for 5 years if the tax laws are changed. I am not up to date on any revisions that have been made, so is this still the case? Also, he asked if refinancing the property would start the clock back over. If I am reading IRS Pub. 523 correctly, this won't matter, would that still be correct with the new tax laws?
I have been watching this closely. Last time I looked, yesterday, that change is NOT going to happen. It was initially on the books and was taken out. It was going to be instead of 2 of 5, future 5 of 8.
It remains to be a proposal as we speak on 12-19-2017.
These seem to be conflicting reports. Does anyone else have an opinion on this subject?
With the reform that was passed. the 2 out of 5 rule was left unchanged in the end.
Thank you for the update