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How do I switch my Primary Residency?

“My husband and I sold our primary home this year, but still own another house in a different state. We are now renting in the city of our primary home, but would like our second home to be considered our primary for capital gains reasons. I spend at least 50 % of my time at our second (now only) home. What do we need to do to make our 2nd home our primary?”

Primary Residency

Primary Residency

First and foremost, I suggest you consult a tax professional. Tax professionals deal with state residency issues on a regular basis. There are a great deal of people whom claim they live in another state, then they truly live in. The reason being some states are state-income-tax-free, an example would be Florida. This benefit would be considered tax evasion, and it will cost you time and money.

It would be smart to start keeping a detailed booklet, logging when you are actually present in each home. I think you need around 183 days in a home to consider it your primary residence. In order to qualify for the tax exemption, you may need to actually log 2 full years out of the past 5 actually living in that home, so if you’re only there half the year, it may take you 4 of those 5 years just to get 2 full years that actually qualify.

Primary Residency.

  • For majority of the year, a owner lives within the property.
  • The property is in a location that makes sense in relation to their employment.
  • The home contains characteristics that suits the needs of their immediate family.
  • The borrower intends to occupy the property.

Secondary Residency.

  • A secondary residence or vacation home must be a reasonable distance away from a principal residence.
  • The owner must occupy the property for some portion of the year and the property must be suitable for year round occupancy.
  • It’s generally a little tougher to qualify for a second home.

I am not a tax professional so reaching out to one is the best advise I can give you. It is just too complex of a situation to just guess on. Spending a couple hundred bucks with a tax adviser now could save you thousands in taxes or penalties, if your wrong.

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