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From:  John
Date:  Tue, 19 Jul 2005

I have lived in my home over six years. I rented it the first 4 1/2 years, then purchased it on 12/15/03. Must I defer the closing of the sale of the house until two years have passed - 12/15/2005, in order to be exempt from capital gains taxes?

Thank you very much for your help!

John

Answer

Date:  Mon, 08 Aug 2005

Yes (but hold the house until at least 12/16/2005), unless you meet one of the "reasonable cause" exceptions for a prorated exclusion. The house must have been owned and used as a principal residence for more than two years during the five years before the sale.

Good luck!
Mike Gray

We have more answers to frequently asked real estate tax questions! We also offer up-to-date information about new tax real estate tax developments in Michael Gray, CPA's Real Estate Tax Letter.

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