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Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: Grapefruit82 on September 25, 2016, 03:35:53 PM

Title: Capital Gains Exclusion - Can it be used twice?
Post by: Grapefruit82 on September 25, 2016, 03:35:53 PM
Hi I have a question.  For the last 10 years my parents have lived in separate residences due to work (they are still married), all their mail, bills, voting stuff all goes to separate addresses.  This year they retired, and are considering making one of their homes into a rental for a few years and then selling it. 

What we would like to do is rent out my mom's house for 2 or 3 years, and then sell it.  That way she'll have lived in it for 2 out of the last 5 years and can still qualify for the capital gains exclusion for primary residences. 

Let's say she rents her home out for 2 years and sells it 4 years from now and moves in with my dad.  Let's say they live together in his home for an additional 4 years before deciding to sell that home, can they get the capital gains exclusion again for the sale of my dad's home since it is again a primary residence?

I have a looked through a lot of stuff online that seems to indicate yes, as long there is 2 years in between the sale of the houses, and he was legitimately living there the whole time it shouldn't be a problem.  But I would like to ask the MMM readers, since this would make a big difference in their decision to either rent or sell the first home.