No, you cannot legally have two primary residences. Even if you split your time equally between two places or in between places while relocating for work, the IRS requires you list one property as a primary residence while filing taxes.
The IRS is very clear that taxpayers, including married couples, have only one primary residence—which the agency refers to as the “main home.” Your main home is always the residence where you ordinarily live most of the time.
Proving it should be a straightforward matter, however. A voter registration card or driver's license, a series of tax returns mailed to you at that address, or utility bills directed to you all indicate your principal residence.
For the IRS to consider a second home a personal residence for the tax year, you need to use the home for more than 14 days or 10% of the days that you rent it out, whichever is greater. So if you rented the house for 40 weeks (280 days), you would need to use the home for more than 28 days.
For capital gains tax purposes, you can only have one main residence at a time. Married couples and civil partners can only have one main residence between them. If you have more than one home, you will need to decide which property is your main residence for capital gains tax purposes.
A few options to legally avoid paying capital gains tax on investment property include buying your property with a retirement account, converting the property from an investment property to a primary residence, utilizing tax harvesting, and using Section 1031 of the IRS code for deferring taxes.
The Property 36-Month Rule is a significant regulation in the United Kingdom that governs the tax implications of property transactions within a specific timeframe. This Rule establishes that selling or transferring a property within 36 months of its acquisition may trigger capital gains tax (CGT) liabilities.
You can claim this deduction using your second home as a rental property. You can usually deduct 3.636% of your taxable income every year since that is the IRS' accepted property depreciation rate. You do not need to itemize your expenses to receive this deduction.
You can deduct property taxes on your second home, too. In fact, unlike the mortgage interest rule, you can deduct property taxes paid on any number of homes you own.
Essentially, a second home is defined as a place where you would only live for part of the year. The IRS defines a second home as a place that you visit for at least 14 days during the tax year. A primary residence, by contrast, is where the owner lives most of the year. It's possible to have more that one second home.
Bottom Line. The IRS prohibits married couples from claiming two primary residences for tax purposes. The designation of a primary residence, or “main home,” holds significant importance for homeowners due to the array of tax benefits tied to this status.
When selling a primary residence property, capital gains from the sale can be deducted from the seller's owed taxes if the seller has lived in the property themselves for at least 2 of the previous 5 years leading up to the sale. That is the 2-out-of-5-years rule, in short.
The IRS doesn't care what state you live in, or if you pay state taxes. The IRS only cares if pay Federal taxes. They need you to correctly report your income and any possible deductions, so that you pay your fair share.
If you are separated, you are still legally married. While you may think you should file separately, your filing status should be either: Married filing jointly (MFJ) Married filing separately (MFS)
When claiming married filing separately, mortgage interest would be claimed by the person who made the payment. Therefore, if one of you paid alone from your own account, that person can claim all of the mortgage interest and property taxes.
IRS Rules on Selling Multiple Primary Residences in a Year
According to IRS rules, an individual is allowed to sell more than one primary residence in a year. However, there are certain requirements that must be met in order for the sale(s) to qualify as tax-free transactions.
Current tax law does not allow you to take a capital gains tax break based on age. In the past, the IRS granted people over the age of 55 a tax exemption for home sales. However, this exclusion was eliminated in 1997 in favor of the expanded exemption for all homeowners.
For federal tax purposes, a boat or a recreational vehicle can be either your main or secondary residence, entitling you to take advantage of the same tax deductions as a homeowner of a typical house.
Some taxpayers have asked if homeowner's insurance is tax deductible. Here's the skinny: You can only deduct homeowner's insurance premiums paid on rental properties. Homeowner's insurance is never tax deductible your main home.
Owning multiple homes gives you the opportunity to create a sustainable and passive cash flow stream. Each additional property adds to the total rental income, which can help cover mortgage payments, property taxes, maintenance costs and other expenses associated with owning multiple rental properties.
Pros. You can use it as an investment. Whether you rent it out for a few days a year or as a full-time investment property, a second home can provide an additional source of passive income. If the property appreciates significantly, you can also sell it for a profit later on.
A vacation home is a type of second home that owners use for leisure throughout the year but do not reside there permanently. Here are a few defining factors of a second home: The owner must use the home at least 14 days of the year. Cannot rent out more than 180 days of the year.
If it takes longer than 6 months to dispose of your old home, the main residence exemption applies to both homes only for the last 6 months before you dispose of your old home. For the period before this, when you owned both homes, you can choose which home to treat as your main residence.
How do I avoid the capital gains tax on real estate? If you have owned and occupied your property for at least 2 of the last 5 years, you can avoid paying capital gains taxes on the first $250,000 for single-filers and $500,000 for married people filing jointly.
Avoiding capital gains tax on your primary residence
You can sell your primary residence and avoid paying capital gains taxes on the first $250,000 of your profits if your tax-filing status is single, and up to $500,000 if married and filing jointly. The exemption is only available once every two years.