Tax Guru – Ker$tetter Letter

Q:

Subject: claim multiple primary residences

I have been told that people are able to claim multiple primary residences, since we did not use a second property as a second home.  In fact we used it as our primary residence 2 or 3 days a week on the average, due to operation of the business in another town, for the last 5-6 years; not vacationing.

 

Thanks,

A:

You appear to be mixing up the issue of multiple primary residences.  At any point in time, each person can only have one primary residence for IRS purposes based on such items as time spent, mailing address, voter registration, driver’s license, etc.

With a married couple, it may be possible for each spouse to have his/her own primary residence if they do in fact live in separate locations.  As with all tax matters, the burden of proving the legitimacy of such a classification rests with the taxpayers.  IRS does not have to prove it it isn’t valid.  You have to be able to prove that each spouse has his/her own separate primary residence.

Where you may be confused is the fact that each taxpayers is allowed to exclude up to $250,000 of profit from the sale of a primary residence each two years.  Before May 1997, the tax law had included a once in a lifetime exclusion of gain from a primary residence sale.  The liberalization of the law to allow multiple usage of this tax free break has been a great opportunity for tax free serial home selling, such as with rental properties that are converted into primary residences.

I have some info on home sales on my website.  

Before undertaking any transaction related to this area of taxation, you should consult with a professional tax advisor.

I hope this helps.

Good luck.

Kerry Kerstetter