The question of how long you should live in your home before selling to avoid capital gains is a common one. It’s important to know that the rules can be a bit complex, but there are some general guidelines to follow. Here are a few things to keep in mind:
Stay in the home for a minimum of two years. This means that you would need to live in the home as your primary residence for at least 24 months before selling it. The two years do not have to run in a row, so you could live in the home for a year, rent it out for a few years, and then move back in for another year before selling.
Flippers of houses should be aware that if you decide to sell a home in which you did not live for a minimum of two years, the proceeds could be tax-deductible. This means that if you buy a home, fix it up, and then sell it within two years, you might not be able to avoid capital gains taxes.
Remember that capital gains taxes only apply to the profit you make on the sale of your home. If you bought a home for $200,000 and sell it for $300,000, your profit is $100,000. Depending on your income, you may be able to exclude up to $250,000 (or $500,000 if you file taxes jointly with your spouse) of that profit from capital gains taxes if you meet certain requirements.
Ultimately, the length of time you should live in your home before selling to avoid capital gains depends on your individual situation. Make sure to consult with a tax professional or real estate agent to get personalized advice.