Tax benefit for sale of primary changes from 2 of 5 to 5 of 8

[Jon Holdman]

I found this when reviewing the new tax bill and posted about it in another post.   Its not something I've seen mentioned in any of the news coverage.  But very significant to folks here.  This tax bill has a HUGE change in the ability to exclude gain on sale of a primary residence from requiring that you live in it for two of the five years prior to sale to five of eight years prior to sale.

That change takes effect for sales or exchanges after December 31, 2017. So, if you bought a house you're living in any time from 1/1/12 to 12/31/15, and were expecting to sell sometime after 1/1/18 and planned to use this provision, you have a big change in plans. Further, if someone has already managed the two year time period they have a very strong incentive to CLOSE by 12/31/17. At best, I could see this passing in very late December, if it passes at all. But if it does, buyers with cash in hand and a fast title company would be in a position to offer fire sale prices to seller who expected to move in early 2018 and use this provision.

[Jon Holdman]

I don't think there's any "meant to prevent taking advantage" or "protect someone" or anything like that.  Its simply a way to increase revenue so they can cut somewhere else.  It does have the effect of significantly reducing the viability a low-speed live in every two years fix and flip strategy.  But I'm not sure congress is really concerned about that.  If anything, its meant to kill that low speed flip strategy and pull that tax revenue into government coffers.  So much for helping the little guy.