Hello wise MMM community. Hopefully an easy question for someone:
If one lives in a home (home 1) for 2 years or more, moves into a home that was used as a rental property (home 2) and rents out home 1 before selling it in 2.5 years, is the 2 year waiting period for the capital gain exclusion on home 2 based on the closing date of the sale of home 1 or is it based on the calendar year?
For example, I sell home 1 in July of 2020. I take the capital gains exclusion for home 1 in the 2020 tax year. By then I've already lived in home 2 for 2 years. If I sell home 2 in 2022 and want to claim the exclusion for the 2022 tax year, is it based on calendar year or 2 years from previous closing? In other words, does it matter if I sell home 2 on Jan 1 2022 vs Aug 1 2022 if I sold home 1 in July of 2020? Thank you in advance.