Reader gets schooled on real estate tax breaks

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DEAR BOB: I heard that homeowners must now live in their homes at least five years, not just two years, to be able to claim the $250,000 home sale capital gains tax exemption. Is this true? – Minh H. DEAR MINH: No. Good news! Your informant is mistaken. Purchase Bob Bruss reports online. To qualify for the principal residence sale tax exemption up to $250,000 (up to $500,000 for a married couple who both qualify), the home seller must have owned and occupied his/her home an "aggregate" 24 of the 60 months before its sale. The 24-month occupancy time need not be continuous. It is possible to buy your house or condo, live in it up to 24 months to qualify for the Internal Revenue Code 121 exemption, and sell it in the 25th month with up to $250,000 (or $500,000) tax-free capital gains. Your informant was probably thinking about the big change made to IRC 121(10) for a principal residence acquired in a "like-kind" tax-deferred exchange under IRC 1031. For those homes obtained as ren...