For the home-owner capital gains tax break, how must I prove I lived in my house for 2 years?

Question

What if renovations took 6 months and my mailing address wasn't changed and the bills are in my girl friends name, etc?

Answer 1

In the case of a taxpayer that has to determine a principal residence between more than one residence, Treas Reg. 1.121-1(b)(2) states: In the case of a taxpayer using more than one property as a residence, whether property is used by the taxpayer as the taxpayer's principal residence depends upon all the facts and circumstances. If a taxpayer alternates between 2 properties, using each as a residence for successive periods of time, the property that the taxpayer uses a majority of the time during the year ordinarily will be considered the taxpayer's principal residence. In addition to the taxpayer's use of the property, relevant factors in determining a taxpayer's principal residence, include, but are not limited to --

(i) The taxpayer's place of employment;
(ii) The principal place of abode of the taxpayer's family members;
(iii) The address listed on the taxpayer's federal and state tax returns, driver's license, automobile registration, and voter registration card;
(iv) The taxpayer's mailing address for bills and correspondence;
(v) The location of the taxpayer's banks; and
(vi) The location of religious organizations and recreational clubs with which the taxpayer is affiliated.

Therefore, it could be contended that you never broke residency during the period of renovation.




Any tax advice included in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed on the taxpayer by any governmental taxing authority or agency.

Answer 2

Depends what name you are taking the tax break in. Can you prove you paid the bills. Check etcs. Utility bills are usually the way the tax people look at living in a home. Is the house in your name then if you can produce receipts showing it was your primary address for that time no problem otherwise you may have to wait another 6 months. Ask your accountant.

Answer 3

That's a temporary absence. No problem!