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Q&A: You need to satisfy this key requirement to get an IRS home sale tax exemption

August 29, 2022 By Liz Weston

Dear Liz: I was given a condominium, which I’m renting out while I live overseas, traveling from country to country. I understand that when I sell the condo, I can exclude up to $250,000 of home sale profits if the property is my “primary residence” for at least two of the last five years. But how is primary residence established? I have heard that the IRS looks at the address on your tax returns, on your voting registration and on file with the Department of Motor Vehicles. I list the condo’s address for voter registration but with the IRS and DMV, I use my mail forwarding address. Will that keep me from establishing the condo as my primary residence?

Answer: What’s keeping you from establishing the condo as your primary residence is the fact that it’s not your primary residence. Someone else is living there and paying you rent.

If you want to take advantage of the home sales profit exemption, you need to actually occupy the home. You’re allowed “short, temporary absences” but not the vagabond life.

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Filed Under: Home Sale Tax, Q&A Tagged With: home sale tax, q&a

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