Just under two years ago, I moved to California and bought two homes. I lived in one for about 10 months while renovating the second, then moved into the second while renovating the first, also about 10 months. (I'm rounding the figures to simplify the math.) I've been offered a job outside of the country, and will sell both houses.
Neither house was a primary residence for the requisite 2-year period. My understanding, though, is that if I sell because of a job-related move, I can pro-rate the $250K capital-gains tax exemption by the fraction of 2-years that I lived in each house. In the following calculation, I assume that each house gained $50K in value:
exemption for each house: $250K * 10/24 = $104.17K total exemption: = 208.33K total capital gains: = 100.00K
Does this mean that my exemption completely covers the total capital gains?