Taxpayers sell their personal house in 2009 and buy a house for less than than the cost basis of the house sold. They take an exclusion for the gain. If they live in the new house for more that 2 years can they take another full exclusion?
Seems like it. The following excerpt comes from this link:
http://www.irs.gov/newsroom/ar...
"To exclude gain, a taxpayer must both own and use the home as a principal residence for two of the five years before the sale. The ownership and use periods need not be concurrent. The two years may consist of 24 full months or 730 days. Short absences, such as for a summer vacation, count as periods of use, but longer breaks, such as a one-year sabbatical, do not. The taxpayer also must not have excluded gain on another home sold during the two years before the current sale."
Yes, assuming they meet all the other requirements.
§121 is simple. There is no "once in a lifetime" limitation. As long as you meet the ownership and residency tests, you can do it over and over again.
Also, the purchase price of the new residence is irrelevant under 121.
Under current tax laws if they live in the new residence at least 2 out of 5 years prior to the date of sale of the primary residence thes Yes they would qualify for the exclusion. This assumes that the current legislation is still in effect and is not changed
