I am planning to sell my primary residence I purchased on December 2020. Am I exempt from capital gains tax since I have been living in the house for more than 2 years consecutively or do I have to also own the home for at least 5 years to get qualify for the exemption?
Accountant · San Diego, CA · Member since 2019 · 1k+ posts · 552 votes
2y
Hey Justin,
Section 121 allows you to exclude 250k from gains as single and 500k from gains as married.
The main restriction on using the Section 121 exclusion is the ownership and use test. This requires that the taxpayer has owned the home and used it as a primary residence for at least 24 months out of the previous 60 months. The 60-month period ends on the date the home is sold. The 24 months do not have to be consecutive. It does not mention you need to own the asset for a minimum of 5 years, so your all good. There is however, a "once every two years" limit
Real Estate Agent · Orange County · Member since 2022 · 317 posts · 293 votes
2y
The capital gains exemption rule is that you had to have lived in the property during 2 of the past 5 years. If you're single, you are exempt from paying capital gains up to $250K, if you're married you are exempt from paying capital gains up to $500K.