Q: I have a question relating to the capital gains tax exclusion on the sale of a home.
It has to do with the “2 out of 5 years” time period. Suppose a couple occupies a vacation home 3 day per week for the last 10 years. Are they eligible for the exclusion? I understand that the years do not have to be consecutive, do the days?
A: In general, when you sell your home and it is your primary residence, you can exclude from federal income tax $250,000 (if you are single, or $500,000 if you are married) of the profits from the sale of the home. But you must have used the home as your primary residence for two out of the last five years.
In your case, you have indicated that the home was a vacation home and you didn’t use it as your primary residence for two out of the last five years. You didn’t even spend the majority of the week there, just less than half.
Because of this, you won’t be able to exclude the gains from federal income taxes when you sell the property.
Nov. 17, 2007.