Are there any tax advantages to living in a house for two years before selling it?

Or to put it another way, is there a tax penalty if a house is sold within the first two years of ownership.

It is a new home.

I don't know of any advantages taxwise. The resale value is probably excellent. And if you are moving due to work, keep reciepts for ALL of your moving expenses including set up of the new home etc. It is all tax deductable.

While not an expert, I do remember something about selling and taxes.

If you sell a house for more then you paid, you have to pay taxes on the difference. The only way to avoid this tax is to reinvest in another house.

Not a tax expert. Even pay someone to fill out my 1040EZ. LOL

Unless the tax code has changed in recent years, the rule was that profit on the sale of your home was exempt, one time only, and up to a certain value, but it must have been your principal residence for three years or more.And you can keep on postponing the tax if you buy a more expensive house within a certain period of time.

I see where you are going with your question.

This is the basics: If you lived two of the last five years in the home then you don't have to pay a capital gains tax if you stay within your cap. If you sell your house and make a profit (and you've lived in the house the last 2 years) you would be only taxed on the profit above your cap.

If you live in the house less than two years then the cap that you have is less. (not sure how much less), which would mean any profit above the cap, you would be taxed on depending on how long you lived there.

The tax exclusion is $500,000 for married and $250,000 for single. You may want to check with a tax consultant to be sure.


Here is a site that will explain it a little better (there are so many stipulations depending on your circumstances):

capital gains