Requirements for proving primary residence 2 of 5 years

2 Replies

hi all! looking for some guidance here. what proof does the IRS require to show that you lived in the home as your primary residence for 2 of 5 years? example: I bought a townhome in aug 2015, lived in it for just over a year until oct 2016 and began renting it out until moving back in feb 2018, treating as my primary residence for another year, until feb 2019 - if i sell before aug 2020 do i qualify for the capital gains exemption?

@Michael Sandvig

You have to meet the ownership and use test for the time period. There are some exceptions. Good question to ask your CPA. Or some of the other accountants here might give you the answer for free :)

@Michael Sandvig

The IRS does not require a proof until/if you're audited. 

However, in your scenario you will only qualify for a partial exclusion, not 100%. You will still owe some capital gain tax. Details are too complicated to explain in a post. Search this forum for "non-qualified use", and you will find multiple threads where it was discussed at length.