I'm confused about the wording of "lived two years out of five" for the tax exempt sale of a primary resident. Does that mean I can sell it after 2 years of living in it, or do I have to satisfy the 5 years regardless?
This is not tax advice, consult with your tax accountant before deciding on doing anything.
2 out of the past 5 years.
I'm putting "probably" in everything because i'm not a tax accountant.
You lived in the house for 2 years, you go to sell-this will probably qualify
You lived in the house for 10 years, you go to sell-this will probably qualify.
Here is where the "past 5 years" comes in
You lived in the house for 2 years, you move, you live in the new house for 1 year and then you go to sell the original house-this will probably qualify as it is 2 of the past 5 years.
You lived in the house for 10 years, you move to a new house, you live in the new house for 10 years, you go to sell the original house-this will probably NOT qualify. Even though it was once your primary, you did not live there for 2 of the past 5 years. You lived there for 10 of the past 20 years.
hope this helps.
After two years of living in it as your primary residence you can sell and exclude up to $250k in capital gains if single or up to $500k in capital gains if married.
You typically must live it in for 2 years. If on 2 years and 1 day you sell it- It should be tax free.
The reason the 5 year is mentioned is it comes into calculations if the house wasn't always your primary. If say you live in it 2 years...the make it a rental for a couple years...then sell it.