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Author: CodyZen One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121477  
Subject: Re: Capital Gains Taxes Date: 4/21/1998 12:50 PM
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<You might also look at whether your grandparents can satisfy the requirement of having lived in the
cabin for at least 2 years (24 months, technically) of the last 5 years (again, 60 months). AFAIK,
these 24 months do not have to be continuous nor the last 2 out of 5 years. If so, under the new
rules they may be able to avoid *all* capital gains on the sale, up to a $500,000 joint limit. It may
behoove your grandfolks to take an extended vacation until they accumulate the 24 out of 60 magic
number. Look into it!>

This opens an interesting question. I thought that the IRS required that the home be the primary residence for 2 out of 5 years, not just that you lived there. For example, if you spent Friday through Monday morning at the cabin, you would come close to living there 2 years out of 5. But, I think that the IRS would still claim that this is a vacation home, not primary residence. But if you lived in the cabin for the summer months, changed your address on everything as magazines, drivers license, bank accounts and loans during that period, would the IRS consider the cabin your primary residence during those months? If so, then it might only take a few additional months to qualify it for the tax break.
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