home
The most important reason to stay in your home for the first two years is the avoidance of unnecessary capital gains taxes that could be levied on you if you move out even one day shy of the two year mark.
If you lived there for 2 years and then somewhere else for almost 3 years before you sell, you qualify for the exclusion. If it was a second home for decades and then you moved in for two full years before selling, you qualify for the exclusion.
Your primary residence, according to the IRS, is the place you consider to be your home. It’s where your personal effects are kept, and it should be the residence at which you spend the most time.
If you didn’t live in your primary residence for a full two years, and you left for a specific reason that the IRS deems worthy, you may qualify for a partial exclusion. The IRS is also sympathetic to a variety of circumstances they refer to as “unforeseeable events.”
Our ultimate goal is to build across the street from the place we’re currently renovating. We own the nearly one-acre lot that once held 4 small cabins, and it will eventually be the site of our next “forever home.”
It’s well worth it to make it the two years if at all possible. Capital Gains Taxes are a minimum of 15% for most of us, although when retired or earning a five-figure annual income, they could be 0%.