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I bought property in June 2019 and planning to sell it 2 years after to get capital gains exemption. My concern right now if my residency to get the exemption is going to be calculated. from June since the purchase or not.

I have checked the IRS resource for info but it doesn't cover one gray area I am in. I would like to understand how the residency is calculated.

In my case I bought a house in June 2019 but moved in in August 2019 as I was renting an apartment and doing reno in the new house. I switched my bills to that new property in June but not DL or USPS address. My forwarding confirmation was on 08/10 2019.

Can I assume that since it was my only property and not rented out that it will count as my primary residence for 2 full years in June 2021. or I will still have to prove it with DL and USPS address (which only start in August)?

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    What does your question have to with capital gains exemption on selling property? You just bought the property (June 2020?)! Are you planning on selling it some time soon? – Dilip Sarwate Apr 26 at 18:58
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    @DilipSarwate sorry for confusion , updated the question to reflect years. I bought the house in June 2019 and going to sell in Jun 2021, so I am trying to qualify for capital gains exemption. – Rainmaker Apr 26 at 19:26
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I would say you do not meet the requirements of the primary residence capital gain exclusion. It sounds like you had an apartment in June and July of 2019 while you did renovations at the new house. Therefore the apartment would be your primary residence for that period, and if you sold in June 2021, you wouldn't meet the 24-month holding period. The IRS points to USPS address and driver's license address as 2 of 4 major factors, and the fact that both were not updated until August 2021 is pretty telling. I would wait until mid-August 2021 to sell to be sure you qualify for the exclusion.

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  • thanks for the reply, sounds logical. I was hoping that if you own a single house and it is not reported as a rental then it's assumed as your primary. But it sounds like it is not the case? – Rainmaker Apr 27 at 13:38
  • @Rainmaker It's all self-reported. But if you were to be audited, you'd need to provide evidence that it was your primary residence for at least 24 months. – Craig W Apr 27 at 13:45

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