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I can understand this being an issue if the homes were in different states (say one with a state income tax and one without.) But what's the issue if they're both in the same state? Could you give an example of some of the benefits of claiming the newer home as the primary residence?

Exclusion of capital gains on sale of primary residence no longer applies to second homes. Also should we choose to AirBnB our city home, it has to be our primary.

IP,
not considering renting at this time, but it is a great short term rental market should we ever feel the need to do so
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We bought a second home last year and spend similar amounts of time in both places, so the "primary residence" is largely a definition. We want the newer house to be the "primary" for tax purposes, but uncertain how to develop support documentation should it ever be questioned by the IRS if sold. They are in the same state. Is it necessary to do things like change license/car registration to the new home or just make sure that property tax bills are sent there? Or is it simply enough to use the address on the tax returns?

Here is what the IRS says about your 'main' home in Pub 523 https://www.irs.gov/pub/irs-pdf/p523.pdf

An individual has only one main home at a time. If you own and live in just one home, then that property is your main home. If you own or live in more than one home, then you must apply a "facts and circumstances" test to determine which property is your main home. While the most important factor is where you spend the most time, other factors are relevant as well. They are listed below. The more of these factors that are true of a home, the more likely that it is your main home.

The address listed on your:
1. U.S. Postal Service address,
2. Voter Registration Card,
3. Federal and state tax returns, and
4. Driver's license or car registration.

The home is near:
1. Where you work,
2. Where you bank,
3. The residence of one or more family members, and
4. Recreational clubs or religious organizations of which you are a member.


Based on that list, I would suggest changing the address to the 'new' home on your driver's license, voter registration and cars, rather than leaving them at the 'old' home. Also, if your state allows homestead exemptions, you should claim the 'new' home as soon as possible.

AJ
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Thanks AJ. Even those factors we are 50/50 in each place. Some of our vehicles are garaged at one place or the other and insured as such, but we can certainly change our drivers licences and voter registration. And perhaps I can start having the utility bills sent to the house we declared as principal on our taxes, rather than to each house.

IP
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And perhaps I can start having the utility bills sent to the house we declared as principal on our taxes, rather than to each house.

Having the new house as the address for bank and brokerage statements would be another possibility.

AJ
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Having the new house as the address for bank and brokerage statements would be another possibility.

That's already done for the majority of our accounts. I find it backwards to expect your banks will be nearby these days. Our checking was opened 30 years and 5 moves ago, all of our financial institutions out of state. Bank statements mostly are electronic, eliminating a classic proof of residence document for things like driver's license. Proving residence to get instate tuition for Youngest has been an absolute bear, since I have no paycheck, instate bank or statements. I am by no means a trailblazer of modern life but these institutions really need to get into the modern day when it comes to their expectations of documentation.

IP,
ending rant with admission of being outside the norm in many categories
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In New York, people I work with in similar circumstances keep very careful records of exactly how much time they spend in each house.

Morris
See positions at: http://my.fool.com/profile/CMFTurningItBlue/info.aspx
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I can understand this being an issue if the homes were in different states (say one with a state income tax and one without.) But what's the issue if they're both in the same state? Could you give an example of some of the benefits of claiming the newer home as the primary residence?

About the only one I can think of would be garaging your automobiles in a rural area vs. urban area to get lower insurance rates.

intercst
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I can understand this being an issue if the homes were in different states (say one with a state income tax and one without.) But what's the issue if they're both in the same state? Could you give an example of some of the benefits of claiming the newer home as the primary residence?

I would guess that the original poster is thinking about selling one of the houses for a profit some years from now, and excluding the capital gain under section 121, which applies to primary residences.

In New York State, different parts of the state have different income tax rates, so it could be an issue.

Morris
See positions at: http://my.fool.com/profile/CMFTurningItBlue/info.aspx
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I can understand this being an issue if the homes were in different states (say one with a state income tax and one without.) But what's the issue if they're both in the same state? Could you give an example of some of the benefits of claiming the newer home as the primary residence?

Exclusion of capital gains on sale of primary residence no longer applies to second homes. Also should we choose to AirBnB our city home, it has to be our primary.

IP,
not considering renting at this time, but it is a great short term rental market should we ever feel the need to do so
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