Main Residence Requirements and Exclusion Claim
To be considered as a main residence, the property must be a dwelling house which is the individual’s only or main residence. You can nominate one property as your main home by writing to HM Revenue and Customs. Include the address you want to nominate. All owners must sign the letter. You must do this within 2 years whenever your combination of homes changes.
IRS Verification of Primary Residence
To claim the exclusion, you must meet the ownership and use tests. The IRS determines your primary residence by where you spend the most time. Homes, apartments, boats, and trailers can qualify as a primary residence if it is where an individual, couple, or family resides most of the time.
IRS Definition of Main Home
A primary residence is the home where you live most of the time. You can only have one at a time. It is usually the address on your driver’s license and tax returns.
To prove a home as your primary residence, the IRS looks at deeds, insurance, taxes paid and bills. They also check expenses and time away, to confirm you live there most of the year.
You may owe capital gains tax when selling a home. But the IRS allows an exemption for some gains on your primary residence. To qualify, you must have owned and lived in the home as your main home for 2 of the past 5 years.
The IRS rarely takes primary homes for unpaid taxes. They try other options first. But they can legally seize homes if needed.
Moving out of state for college? You must live in a state for 12 months to become a resident for tuition rates. The Supreme Court ruled states can’t tax the same income.
Selling an investment property? Report that to the IRS. Sale of a primary home goes on your tax return too. But special IRS rules may exempt some of those gains.