Do I have to close on the exact date 2 years later to avoid Capital Gains tax

Forum|Forum|6 years ago
June 6, 2019
2 replies
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We closed on our current house Jan 15th, 2016, we are scheduled to sell this house on Jan 2nd, 2018. This house has been our primary residence the entire time we have owned it. Do we need to see if we can push closing to the 15th 2018 or will the capital gains tax not apply because we have used this address for two congruent years on our taxes.

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DoninGA

Employee

You need to have lived in the home as your personal primary residence for a total of 730 days during the 5 year period from the date of purchase to avoid capital gains.

See IRS Publication 523 Selling Your Home page 3 - https://www.irs.gov/pub/irs-pdf/p523.pdf#page=3

jodonnelly

I realize this is an old post but hoping someone has some insight on this. We closed on our house 6/30/2020 and we are selling our house 6/30/2022. We purposely did this to meet the 2 year mark to avoid capital gains tax. Will exactly two years avoid this tax or should we push closing to 7/1/2022?

NCPERSON1

the IRS guide simply states 'at least 24 months"

https://www.irs.gov/pub/irs-pdf/p523.pdf

right side of page 3

Eligibility Step 2—Ownership
Determine whether you meet the ownership requirement. If you owned the home for at least 24 months (2
years) out of the last 5 years leading up to the date of sale (date of the closing), you meet the ownership requirement.

personally, if it were me, and it didn't upset the deal, I'd push it to July 1st to be safe.

Carl11_2

Employee

I concur with @NCPERSON1 and would push it to July 1st to be safe.

Keep in mind that if you establish your "new" residence before the closing date of the old one, I don't know what consequences that will have for causing issues should you be audited on this matter. Typically, you move out of the old residence a few days before you actually sell it, at the least. But most home sales I'm aware of, the property was vacated by the owner a month or more before the sale so that the property is clean and empty for showings.