5 ms·

You are misinterpreting that part; you can claim the exemption in a house you've lived in for two years. "Two years out of the last five" means you can live in

You are misinterpreting that part; you can claim the exemption in a house you've lived in for two years. "Two years out of the last five" means you can live in the house for two years, then move out of it (presumably because you bought another house) and rent it for up to three years, and then sell it and still claim the exemption. Even after that, you can sell it and still not pay taxes on it if you use the proceeds to purchase a different investment property (this is the "1031 exchange" that's been mentioned several times).

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rascul 5y ago
I don't see how our interpretations differ. You showed that there are ways for middle-class homeowners to pay the tax. Sell the house after less than five years and don't use the proceeds to purchase another house. That scenario seems to happen often enough from what I see, and it appears that the IRS will be collecting money in those cases.
- ineptech 5y ago
  > Sell the house after less than five years You need to live there two years, not five[0]. > You showed that there are ways for middle-class homeowners to pay the tax... I said... "on their home". If you move out of it and rent it out, it's not your home anymore, it's an investment property, which is taxed differently, as it should be. Regular people (not real estate investors or landlords, people who just own one home at a time) almost never pay taxes on a home purchase[1]. 0: https://www.irs.gov/businesses/small-businesses-self-employed/sale-of-residence-real-estate-tax-tips https://www.irs.gov/businesses/small-businesses-self-employe... 1: https://www.letmegooglethat.com/?q=do+i+need+to+pay+taxes+on+the+sale+of+my+home https://www.letmegooglethat.com/?q=do+i+need+to+pay+taxes+on...
  - rascul 5y ago
    > You need to live there two years, not five[0]. Thank you. That wasn't clear to me. I interpreted it as you needed to have it for five years and live in it two out of those five. Makes me wonder why my father had to pay tax when he sold his house. But then this is just by memory, he doesn't have his 1040 anymore.

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[deleted]

rascul 5y ago

I don't see how our interpretations differ. You showed that there are ways for middle-class homeowners to pay the tax. Sell the house after less than five years and don't use the proceeds to purchase another house. That scenario seems to happen often enough from what I see, and it appears that the IRS will be collecting money in those cases.

ineptech 5y ago
> Sell the house after less than five years You need to live there two years, not five[0]. > You showed that there are ways for middle-class homeowners to pay the tax... I said... "on their home". If you move out of it and rent it out, it's not your home anymore, it's an investment property, which is taxed differently, as it should be. Regular people (not real estate investors or landlords, people who just own one home at a time) almost never pay taxes on a home purchase[1]. 0: https://www.irs.gov/businesses/small-businesses-self-employed/sale-of-residence-real-estate-tax-tips https://www.irs.gov/businesses/small-businesses-self-employe... 1: https://www.letmegooglethat.com/?q=do+i+need+to+pay+taxes+on+the+sale+of+my+home https://www.letmegooglethat.com/?q=do+i+need+to+pay+taxes+on...
- rascul 5y ago
  > You need to live there two years, not five[0]. Thank you. That wasn't clear to me. I interpreted it as you needed to have it for five years and live in it two out of those five. Makes me wonder why my father had to pay tax when he sold his house. But then this is just by memory, he doesn't have his 1040 anymore.