Tax Experts
Determining Your Primary Residence When Selling One of Two Homes
By Kevin McCormally, Editorial Director, Kiplinger.com
April 2008
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Q: We have owned our home in Texas for 48 yrs. We moved to Colorado and bought a second home 18 years ago. We still use our home in Texas when we go there to visit with family and friends, which is quite often.
We sold the Texas home. We can add up our time spent in this home to equal 24 months out of the past 5 years, the required time to avoid capital gains. Do we have to report the sale on our income tax? We claim both homes as our main home. -- Sally J.
Kevin's Answer
This is a tough one. The law says you can't have two principal residences. Your principal residence is the one you spend most of the time in.
Now, one of the homes could have been your principal one year, the other the next, and so on. But if you lived in the Texas place for four months out of the year and the Colorado home for 8 months each year for the last five years, the Colorado home is your principal residence, even though you spent 24 of the last 60 months in Texas. If this is how it worked, you don't qualify for tax-free profit.
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