Qualifying for Section 121 Capital Gains Exclusion as a Digital Nomad - Primary Residence Question

I'm planning to sell my house and hoping to qualify for the Section 121 capital gains exclusion, but I'm unsure if my situation meets the requirements. I need some advice! Section 121 requires that the house be my primary residence for 2 of the past 5 years. My question is - what exactly counts as a primary residence in my situation? I've owned this home for over 12 years. It's the only property I own. All my official documentation is tied to this address - mail delivery, voter registration, tax return filing address, etc. It's also where I store all my belongings. The complication is that I began traveling internationally in early 2021. I've been on the road continuously since January 2021, staying in hotels and vacation rentals. I typically spend about 2 weeks in each location and haven't stayed anywhere for more than 3-4 weeks at a time. Since I haven't physically lived in my house during 2021, 2022, and 2023, does it still count as my primary residence for those years? Can I still qualify for the Section 121 exclusion when I sell?

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18 comments

Isabella Martin

•8M

Your situation is actually pretty common these days with remote work becoming more popular. The good news is that the IRS looks at several factors when determining your "primary residence" - not just where you physically sleep every night. The fact that your house is your only property, where you're registered to vote, receive mail, and file taxes from are all strong indicators that it's still your primary residence. The IRS also considers things like where your driver's license is registered and where your bank accounts are based. There's also a specific provision in the tax code that allows for temporary absences, including travel and working abroad, without interrupting your period of ownership and use. As long as you haven't established a new primary residence elsewhere (which it sounds like you haven't since you're constantly moving), you should still qualify for the Section 121 exclusion.

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Isabella Martin

•8M

The IRS generally doesn't track the specific number of days you physically occupy your home. What matters more is that you haven't established a new primary residence elsewhere. Your pattern of continuous travel without settling anywhere else actually helps your case, as it shows you didn't replace your original home as your primary residence. If you were audited, they would look at the factors I mentioned - your voter registration, where you file taxes from, where your driver's license is registered, etc. Having documentation showing your house as your official address for these purposes is much more important than proving physical presence for a certain number of days.

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Sophia Miller

•8M

After dealing with a similar situation, I found this amazing tool called taxr.ai (https://taxr.ai) that helped me figure out my primary residence status as a digital nomad. I was traveling for work most of 2022-2023 while still owning my home in Colorado, and I was stressed about losing that capital gains exclusion. The tool analyzed my situation and provided clear documentation showing how my case aligned with IRS definitions of primary residence. It even referenced specific tax court cases where similar situations were ruled in the taxpayer's favor. Super helpful for us nomadic folks who don't fit into traditional residency patterns!

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Sophia Miller

•8M

The system asks detailed questions about your specific situation, including voting registration, mail handling, where you store possessions, and your travel patterns. You don't need to upload sensitive documents directly, though you can reference them when answering questions. For multi-state situations, it's especially helpful because it applies both federal guidelines and accounts for specific state tax rules that might affect your primary residence status. The analysis includes relevant tax code citations and precedent cases. The documentation isn't an "official IRS ruling," but it provides organized evidence and legal reasoning that you can use to support your position if questioned. It essentially helps you build a strong case based on established tax principles and relevant court decisions, which is exactly what you'd need during an audit or tax dispute.

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Mia Rodriguez

•8M

I was skeptical about taxr.ai when I first heard about it, but I decided to try it before selling my house after traveling abroad for 18 months. Honestly, I'm really glad I did! The analysis helped me understand exactly how the temporary absence provisions applied to my situation. The best part was that it highlighted facts about my situation that I hadn't even considered relevant - like how I continued to pay for utilities and maintenance while away, and how I never established ties to any other location. The report organized everything into a coherent argument that clearly showed my home still qualified as my primary residence under Section 121. When I filed my taxes, I felt completely confident claiming the capital gains exclusion. Money well spent for the peace of mind alone.

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Jacob Lewis

•8M

If you need to talk directly with the IRS about this, good luck getting through on the phone! I spent WEEKS trying to get a straight answer about my residency status. Then I found https://claimyr.com (there's a demo video here: https://youtu.be/_kiP6q8DX5c) which got me connected to an actual IRS agent in under 30 minutes. I explained my situation (similar to yours - I was traveling for extended periods but kept my house as my legal residence), and the agent confirmed that as long as I hadn't established a new permanent residence elsewhere, my home would still qualify under Section 121. Getting that direct confirmation from the IRS was such a relief and worth every penny to not spend hours on hold.

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Jacob Lewis

•8M

It uses technology that navigates the IRS phone trees and waits on hold for you. Once they get an actual IRS agent on the line, you get a call connecting you directly to that agent. It's the same IRS phone line, but they handle all the waiting and navigation. No, it's not just redialing. Their system stays connected and monitors the line continuously using advanced tech that can detect when a human answers versus recorded messages. Most people can't sit on hold for 2-3 hours straight, repeatedly trying different options on the IRS menu system - that's why this exists.

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Ethan Clark

•8M

I was absolutely wrong about Claimyr. After posting that skeptical comment, I decided to try it anyway because I was desperate to get clarity on my rental property conversion question before filing. It actually worked exactly as described - I got a call back in about 45 minutes with an IRS agent already on the line. The agent was able to confirm my understanding of the primary residence rules and documented our conversation with a case number I could reference if needed. For what it's worth, the agent told me that digital nomads/travelers are a common scenario they deal with, and maintaining your legal ties to your home (voter registration, tax filing address, etc.) while not establishing permanent residence elsewhere is the key factor they look at.

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Mila Walker

•8M

One thing nobody's mentioned yet - check with your state tax authority too! Federal Section 121 exclusion is one thing, but some states have different rules or interpretations about primary residence. In my case (WA state), I had to provide additional documentation to prove my home was still my primary residence despite being gone for 16 months. I needed copies of my voter registration, utility bills (even though they were minimal since I wasn't there), and property tax statements. The county tax assessor had initially questioned my homestead exemption because a neighbor reported my house was "abandoned" when I was traveling. What a nightmare that was to clear up!

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Mila Walker

•8M

Arizona is actually pretty reasonable with their rules from what I know. The key is that you've maintained the utilities and have someone checking on the place - that shows intention to return and ongoing maintenance of the property as a residence. Check with the Arizona Department of Revenue to be sure, but they generally follow federal guidelines for primary residence. The fact that you've been paying for maintenance is a strong indicator that you haven't abandoned the property. Just make sure you have documentation of those payments for the maintenance person as additional proof if needed.

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