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January 28, 2022
Question

Moved in 2020 from IL to MO, Illinois house sold in 2021 - Investment or Primary?

  • January 28, 2022
  • 2 replies
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We moved from Illinois to Missouri late in 2020 and purchased a home in MO in Oct 2020.  Our Illinois home was our primary residence for seven years up until the move.  The Illinois home was on the market and vacant until it sold in April of 2021. My question is should this sale in 2021 be listed as an Investment (as a second home), or the sale of a primary residence?  We did not live in the home in 2021 but did maintain it and paid taxes on it until the sale in April of 2021.

    2 replies

    LeonardS
    January 28, 2022

    The sale of your Illinois home qualifies as the sale of a primary residence due to the fact it was your main home for two years or more within the five years leading up to the sale.

     

    This link Is the money I made from a home sale taxable? has information you may find useful.

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    Carl11_2
    Employee
    January 28, 2022

    Actually, how long you lived in the property is not a determining factor in where to report the sale. But it "is" a determining factor in qualifying for the "2 of last 5" capital gains tax exclusion rule. Before you vacated the property is was your primary residence. Since you did not use it for any other purpose after you moved out, you report it as the sale of your primary residence.The fact it sat vacant for a period of time after you moved is somewhat irrelevant "to a point".

    If you lived in the property as your primary residence for at least 2 of the 5 years you owned it, counting back from the closing date of the sale, then you qualify for the exclusion. The period of time it was your primary residence during the last 5 years does not have to be consecutive either.

    You vacated the property in/around Oct 2020 and moved into another house. So the vacant property stopped being your primary residence in Oct 2020 (roughly). Lets say it sat empty for a year and you sold it in Oct of 2021. Counting back 5 years from Oct 2021 takes you to October 2016. The house was your primary residence from Oct 2016 to October 2020 which is four years. Well more than the 2 year requirement.

    Heck, even if you had rented it out after you vacated and then sold it while it was still a rental you would still qualify for the exclusion.