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J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return by J.K. Lasser Institute

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29.2 Meeting the Ownership and Use Tests

To qualify for the up-to-$250,000 exclusion, you must have owned and occupied a home as your principal residence for at least two years during the five-year period ending on the date of sale. The periods of ownership and use do not have to be continuous. The ownership and use tests may be met in different two-year periods, provided both tests are met during the five-year period ending on the date of sale (as in Example 3 below). You qualify if you can show that you owned the home and lived in it as your principal residence for 24 full months or for 730 days (365 × 2) during the five-year period ending on the date of sale. However, some of the gain on a sale after 2008 might not be excludable, even if the two-out-of-five-year ownership and use tests are met, if you use the residence after 2008 as a second home or rental property; see the discussion of the nonqualified use rule at the end of this section.

If you or your spouse serve on qualified official extended duty as a member of the uniformed services, Foreign Service of the United States, intelligence community, or Peace Corps, you can suspend the five-year test period for the years of qualified service; see below.

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image Filing Tip
Short Absences
Short temporary absences for vacations count as time you used the residence.
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If you are a joint owner ...

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