Property that Qualifies as a Primary Residence

Property that Qualifies as a Primary Residence

The Property that Qualifies as a Primary Residence There are two tests to determine whether a property qualifies for the $250,000/$500,000 primary residence exemption. To be entitled to the exclusion you must have:

1. Owned the home for at least two years of the last five years.
2. Lived in the home as your primary residence for at least two of the last five years.

These two requirements are referred to as the “ownership test” and the “use test.” There are certain exceptions to the two-year ownership and use requirements (discussed below), but as a general rule both these conditions must be met for a property to qualify for the primary residence exemption.

In addition, even if the property qualifies, you may be disqualified if you or your spouse has taken the exemption on another property within the last two years.

These two requirements are referred to as the “ownership test” and the “use test.” There are certain exceptions to the two-year ownership and use requirements (discussed below), but as a general rule both these conditions must be met for a property to qualify for the primary residence exemption. In addition, even if the property qualifies, you may be disqualified if you or your spouse has taken the exemption on another property within the last two years.

IRS publications refer to a primary residence as a “main home” A main home is not necessarily a traditional house; it can be a mobile or motor home, a boat that qualifies as a residence, a co-op apartment, or a condominium. Likewise, a fractional percentage of an investment property that is used as a primary residence may also qualify.