I have two houses. I don't treat them as primary or secondary, they are both occupied. I am keeping them while I can, waiting for the value of one of them to go up sufficiently so I can sell it. Profit on one of them would be over the capital gains exception, the other one would be under.
I do have a few questions:
What is the exact definition of primary vs secondary house? I get bills at both houses. Neither are rentals. I spend time at both, and my family may spend time at both, depending on where they need to be. Does which I homestead matters (right now I do it based on which has the most taxes)? I suspect I will need to sell one of the houses in about 1-2 years, and I need to establish that as the primary house for tax purposes.
Are there any benefits to making one of the houses a rental property? Are rental properties treated differently than secondary houses at sale time, tax wise? I have been thinking about renting one out for income purposes, but not if it screws me up at sale time.
If I sell the primary house and use the exception, how long do I need to wait until I can use the exception again on the second home?
Thanks for any input.