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Can I avoid taxes on my residence without living there two years?

February 28, 2006


Subject:  Home Sale - Capital Gains Question
From:  Andrew
Date:  Wed, 01 Feb 2006

My wife and I live in Maryland. We are looking to sell our current primary residence, which we bought on November 21, 2004. If we sell before that date in 2006, we will not meet the two-year holding period requirement. We also donít have an "unforeseen circumstance" that we are aware of for a partial exclusion.

Our potential gain is $200,000. We donít want to wait until November, but we donít want to pay a tax on the gain. Can you help?

Answer

Date:  Mon, 06 Feb 2006

Hello Andrew,

Iím not a magician. The law gives a road map on how to qualify to exclude the gain. Unless you can come up with an "unforeseen circumstance" like a change in employment, I suggest that you follow the road map and wait until after November 21, 2006 to sell your current residence.

Good luck!
Mike Gray

We have more answers to frequently asked real estate tax questions! We also offer up-to-date information about new tax real estate tax developments in Michael Gray, CPA's Real Estate Tax Letter.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained on this website was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.

Can I avoid taxes on my residence without living there two years?

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