What is the 2 out of 5 year test for a principle residence?
Taxpayers are entitled to an exemption on taxable gains if the home meets the principle residence test. In order for the home to qualify as the principle residence, the taxpayer must meet the 2 out of 5 year test. Basically, this test assess whether or not the taxpayer lives in the home as the primary residence for 2 of the last 5 years leading up to the sale.
You might also be interested in...
What is the hardship provision?
In certain circumstances, taxpayers will be able to take a portion of their otherwise regular $250,000 ($500,000) nontaxable gain on the sale of their home if they qualify for the hardship provision. This is an exception to the two out of five-year requirement and will be provided to taxpayers that are forced to move out […]