Q: On August 20, 2003 my wife and I bought our first home. We received back rent from the owners until they found a home.
We finally moved in on November 1, 2003. We are now planning to sell our home and would like to stay the full two years required to avoid taxes from the state and IRS. When would that date be? Could we start selling now and close by that date?
A: You moved into your house on November 1, 2003. The IRS requires that you live in your house as a primary residence for at least 2 of the past five years. That would bring you to November 1, 2005.
You may certainly list your property now, but you would be wise not to close until November. That way, you can take up to $250,000 in profits (or up to $500,000 in profits) tax free when you sell your home.
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