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Capital Gains on Flip
I bought a flip, which i lived in, for 22 months. Month 22 i sold the house. It was under my understanding that since i lived in the home i could deduct all upgrades to the property and pay a prorated amount of capital gains since i lived in the property 22 out of 24 months. For example i would take my profit multiply by 20% capital gain and then multiply by (1-(22/24)). Am i wrong in this assumption?
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Like Michael said it's a minimum requirement of 24 months for the 121 exclusion unless you meet one of the IRS listed exceptions. THEN it's prorated exclusion amount.
If you just happened to sell 2 months early you may have made the whole thing taxable.
