I'm retired, and live in state 'X'. X has high income taxes, and I'm eager to live elsewhere both for tax reasons and for quality-of-life stuff. But, I'm reluctant to outright sell and move for reasons I won't go into. So, my plan had been to snowbird for a little while - find a place in state 'Y' with lower taxes, and spend >1/2 year there (or traveling), and <1/2 year in my home in X. (X only requires payment of income taxes (on investment income) if you are a 'resident', defined as spending >= 1/2 year in the state.) I may rent out the home, and live in an alternate dwelling on the property.
Eventually, I'll sell the home in X. I've had it for a while, and want to keep the ability to exclude capital gains on the sale. To do so I'll need to meet the IRS' 2-year rule, requiring me to live in the home for at least 2 of the 5 years preceding the sale. Is that taken to mean contiguous years? That is, if I were living in the home for 6 months of every year, then I could claim that over the past 5 years, I had lived in the home for 2.5 years, spread out. Will this pass the use test?
