What is the law?

[cvap]

If a deed of property has two homes on it, both with their own street address, you spent an equal amount of time living in both and you split the land and sold one of the homes, could it be considered your domicile, and then 5 years later, sell the other home, could it be considered your domicile?

 

[FlyingRon]

What state are you in?

Considered your domicile for what purpose?

 

[adjusterjack]

If a deed of property has two homes on it, both with their own street address, you spent an equal amount of time living in both and you split the land and sold one of the homes, could it be considered your domicile, and then 5 years later, sell the other home, could it be considered your domicile?

Does this have anything to do with your Florida property tax that you spoke of in your last thread?

https://forum.freeadvice.com/buying-selling-home-40/florida-save-our-homes-law-634987.html

 

[NIV]

I assume you are talking about tax favorable treatment under section 121 and mean "principal residence" and not "domicile". There, case law has sales of single properties with multiple uses that requires the seller to split between residence and work parts of the property to protect some of the amount realized on a sale.

While I don't know of the specific facts of the sale you are talking about, it is entirely possible to sell two parts of a property, each being a principal residence covered by 121, if the sales are at least two years apart and all the other ownership and residence rules are followed.

 

[cvap]

Does this have anything to do with your Florida property tax that you spoke of in your last thread?

https://forum.freeadvice.com/buying-selling-home-40/florida-save-our-homes-law-634987.html

No Adjuster that is a home i want to purchase, and this is a home i want to sell. I am trying to figure out if there will be a capitol gains tax or not.

 

[cvap]

I assume you are talking about tax favorable treatment under section 121 and mean "principal residence" and not "domicile". There, case law has sales of single properties with multiple uses that requires the seller to split between residence and work parts of the property to protect some of the amount realized on a sale.

While I don't know of the specific facts of the sale you are talking about, it is entirely possible to sell two parts of a property, each being a principal residence covered by 121, if the sales are at least two years apart and all the other ownership and residence rules are followed.

Thank you, yes I meant principal residence. I will try and read and understand section 121 to figure this out. The two homes are very close to each other sharing a driveway however have different addresses. Our bills come to just one address. The house in question is full of our furniture, food etc., and it is used daily and most nights(I snore) but we have rented it on Homeaway in the past. I just don't want to break any laws by claiming it as part of our residence and the gains taxes may be enough to change my asking price.

 

[adjusterjack]

this is a home i want to sell. I am trying to figure out if there will be a capitol gains tax or not.

Then you need to explain things better.

Are these two homes on one lot? If yes, you will first have to subdivide before you can sell one. If no, go to next question.

Or is each home on its own lot but both properties are on one deed?

The two homes are very close to each other sharing a driveway however have different addresses. Our bills come to just one address. The house in question is full of our furniture, food etc., and it is used daily and most nights(I snore) but we have rented it on Homeaway in the past. I just don't want to break any laws by claiming it as part of our residence and the gains taxes may be enough to change my asking price.

The house you live in is your "main home" (that's what the IRS calls it) for the purpose of the capital gains exclusion.

The house next door that you store stuff in is not your "main home."

Your "main home" probably qualifies for the exclusion if you have lived in it for at least the last two years. To get the capital gains exclusion on the second home you will have to sell your "main home" and move in to the house next door and live there for at least two years before it qualifies for the capital gains exclusion.

The above example is overly simplified and you can get more information from IRS Publication 523 - Selling Your Home:

https://www.irs.gov/pub/irs-pdf/p523.pdf

 

[cvap]

Then you need to explain things better.

Are these two homes on one lot? If yes, you will first have to subdivide before you can sell one. If no, go to next question.

Or is each home on its own lot but both properties are on one deed?



The house you live in is your "main home" (that's what the IRS calls it) for the purpose of the capital gains exclusion.

The house next door that you store stuff in is not your "main home."

Your "main home" probably qualifies for the exclusion if you have lived in it for at least the last two years. To get the capital gains exclusion on the second home you will have to sell your "main home" and move in to the house next door and live there for at least two years before it qualifies for the capital gains exclusion.

The above example is overly simplified and you can get more information from IRS Publication 523 - Selling Your Home:

https://www.irs.gov/pub/irs-pdf/p523.pdf

Both houses are on one lot with one deed. The person interested wants me to split the land in half right between the two homes and has agreed to split this cost. I've owned the whole property since 1998 and have been a permanent resident since 2007. The only question i have , before i click on your irs link, is can both dwellings be considered your main home if they were on one lot, one deed, and are "lived in" equally. One has A/C so it is used more in summer, one has a wood stove and is insulated better so more time is spent there in the winter. But neither is ever shut down and i get electric, tv and internet bills for both homes all year long. Maybe your link explains it for this scenario.

 

[LdiJ]

Both houses are on one lot with one deed. The person interested wants me to split the land in half right between the two homes and has agreed to split this cost. I've owned the whole property since 1998 and have been a permanent resident since 2007. The only question i have , before i click on your irs link, is can both dwellings be considered your main home if they were on one lot, one deed, and are "lived in" equally. One has A/C so it is used more in summer, one has a wood stove and is insulated better so more time is spent there in the winter. But neither is ever shut down and i get electric, tv and internet bills for both homes all year long. Maybe your link explains it for this scenario.

I do not think that the link will address your scenario, because the situation is more than a bit unusual.

Normally, when a property has two homes on one piece of land, then the homes do not have different addresses. Kind of like a house plus a guest house type of situation. Your two houses do have different addresses. If you were selling the property as a whole, with one address, then there would be no problem, because you lived on the property. However, you are wanting to split it in half, and you cannot claim that both homes are your primary residence. The only way it would work is if you sell the home that you primarily live in now, and then live in the other home for at least two years before you sell.

 

[cvap]

I do not think that the link will address your scenario, because the situation is more than a bit unusual.

Normally, when a property has two homes on one piece of land, then the homes do not have different addresses. Kind of like a house plus a guest house type of situation. Your two houses do have different addresses. If you were selling the property as a whole, with one address, then there would be no problem, because you lived on the property. However, you are wanting to split it in half, and you cannot claim that both homes are your primary residence. The only way it would work is if you sell the home that you primarily live in now, and then live in the other home for at least two years before you sell.

Ok that sounds fair. You are the second to say this and the other person added that if i sold the second home to someone else in the same tax year then it would be ok.

 

[adjusterjack]

Ldij may be right about the publication. I'm not finding anything in it that addresses your situation.

There's a tax attorney who often participates on this site.

Wait for his comments.

 

[LdiJ]

Ok that sounds fair. You are the second to say this and the other person added that if i sold the second home to someone else in the same tax year then it would be ok.

I do not agree with the bolded.

 

[cvap]

I do not agree with the bolded.

So you are saying that i would have to sell the whole property to one buyer in one transaction in order to avoid gains taxes? Or move in to each house for two years? I wish i could. That would save the 14k
division survey cost also.

 

[LdiJ]

So you are saying that i would have to sell the whole property to one buyer in one transaction in order to avoid gains taxes? Or move in to each house for two years? I wish i could. That would save the 14k
division survey cost also.

I am saying that if you sell the house that is your MAIN home now (and I do not believe you that you live in both of them equally) and then move into the other home and live in it for at least two years before you sell it that you can avoid Capital Gains Tax on both of them.

IF they had the same address and you sold them as one parcel to one party, then you could avoid capital gains tax on the whole thing at once. However, they are not the same address and you won't be selling them to one party therefore that argument fails.

 

[NIV]

Ok that sounds fair. You are the second to say this and the other person added that if i sold the second home to someone else in the same tax year then it would be ok.

It can either be a single principal residence or they can be two potential parts of a property to sell, you can't really sell two parts and get the exclusion just because they were sold in the same year. The cases that allow for a split sale of a singularly titled property do not have the exemption applying to each part.

The code uses "principal residence". Search for synonyms in case law and you're gonna have a bad time.

("Address" is not used in the code at all. I don't see the reference on a quick search of case law. If you read the cases, it seems the use of the property is the key and not the address.)