Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Archive for December 14th, 2005

Tax cuts keep on working

Posted by taxguru on December 14, 2005

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Primary residence usage

Posted by taxguru on December 14, 2005


Subject: Primary Residence

Dear sir,
I inqired / read on your web page about primary residence.
Please can you explain to me what it means to live in the primary residence in NJ.

I want to sale my house which I had rented out for exactly 30 month’s in the last 5 years. I rented it out the first time for 17 months, then after 3 month (during that time I stayed there-but live as well with a partner in VA. (my incometax – return 2004 was and is sent (this year 2005 as well) to IRS Virginia.
I do not pay any Water etc here in Va, nor do I work.. so I have no Primary Residence here in VA ??

In order to catch the full capital gains for NJ when I sell my house do I have to show that I work in NJ? I pay ,since Nov 1 2005 water etc in NJ for my house. What else do I have to do to show Primary residence in NJ?  Since I do not work? Does just being in my house in NJ mean it is my primary residence ?

again my question is, what constitutes a primary residence since I can live in VA and NJ in my house? I intend to sell my house in spring 2006, after renovations,

Thank you very much for your answer



Just the fact that you weren’t renting out the home doesn’t make it qualify as a primary residence.  Time when you are not living there or renting it would be more like a second personal residence, which has no special tax breaks for sales. 

In a situation like yours, what’s crucial to determine is how many actual days you were physically residing in the NJ home over the five years prior to its sale.  You should get out calendars for those years and do your best to reconstruct where you actually were on each day. 

If your total in the NJ home was more than 730 days over five years, you should qualify for the full tax free exemption of up to $250,000. 

If your total time in the home was less than 730 days, you should work with your personal tax professional to see if you meet one of the criteria for a pro-rated exclusion.

Good luck.

Kerry Kerstetter


Dear Kerry,
thank you soo much for you very good and very fast answer. I will follow your advice…
Have a very merry Holiday Season



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Creative Cash Management

Posted by taxguru on December 14, 2005

Origami for cash courtesy of LinksDaily

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