Claiming a residence for tax purposes

[Indiana Filer]

What is the name of your state (only U.S. law)? Indiana

How much time does someone need to stay at a residence to be able to claim it as the primary residence? We've been given a home and some land, and will want to sell it some time in the future. Because it was gifted to us, our basis in the property is very low. My understanding is that we do not have to pay capital gains tax if we have lived on the property for two of the last five years of ownership.

One of us stays there three nights per week, and uses that address. The other nights are all spent at our house. If we continue to do this for a total of two years, would that be adequate to say he lives there in order to not have to claim the capital gains? Or should I plan on selling my current house, and both of us move over there for a period of two years?

Thanks.

 

[FlyingRon]

Actually, if you live in the house as a principal residence for 24 out of the 60 months preceding the sale you can exclude $250,000 (each for multiple owners) of the capital gain.

It must be your principal residence and just living there a certain percentage of time isn't enough. You must act as if it was. The proximity to your job, location of other family members, address for bills and correspondence, asddress on tax returns, drivers license and car registrations, voters registration, banks, club and church memberships, etc...

Publication 523 (2007), Selling Your Home

You probably should determine which house is most likely to sell first and use that as your full up principal residence, then sell it and move to the other.
You can only use the exclusion once every 24 months by the way.

 

[tranquility]

Let's keep it simple.

The other nights are all spent at our house. [emphasis added]

The gifted property is clearly not your personal residence.

 

[Indiana Filer]

That's why I wanted to know how much time is needed for it to be our residence. I guess we put this place on the market, and then live over there for a couple years. It's close enough that it won't affect jobs or anything else.

 

[davew128]

That's why I wanted to know how much time is needed for it to be our residence. I guess we put this place on the market, and then live over there for a couple years. It's close enough that it won't affect jobs or anything else.

You were already given the answer.

 

[Indiana Filer]

You were already given the answer.

Yeah, and your point is? I was just explaining why I had asked the original question. Perhaps you need lessons in comprehension.