Sold 2 Houses in Same Year - Do I Owe Capital Gains Tax?

Thank you for the detailed response! Just to clarify - even though the first house was only my primary residence until April 2022 and I didn't sell it until March 2024 (almost 2 years later), I'm still covered under Section 121 because I lived there for at least 2 years within the 5-year window before selling? Also, does it matter that I claimed the second house as my primary residence on my taxes while my brother was living in the first house?

Yes, you're still covered under Section 121 for the first house. The law specifically requires that you owned and used the home as your main residence for at least 2 years during the 5-year period ending on the date of sale. Since you lived there from March 2020 to April 2022 (over 2 years) and sold it in March 2024, you fall within that 5-year window. It doesn't matter that you claimed the second house as your primary residence while your brother was in the first house. You can only have one primary residence at a time for tax purposes, which is appropriate since you were actually living in the second home. The important factor for the capital gains exclusion is meeting that 2-out-of-5-years test for each property, which you did.

Did it help with figuring out the adjusted basis for the properties? I've heard calculating basis can get complicated if you've made improvements over the years. Can you upload renovation receipts and stuff too?

I'm kinda skeptical about these online tools. How accurate is it compared to just talking to a CPA? I had a friend who used some tax software that missed a huge deduction that a human accountant caught right away.

It absolutely helped with the adjusted basis calculations. You can upload receipts for home improvements, and it categorizes which ones actually add to your basis and which ones are just repairs (which don't). It even lets you add things like closing costs from your original purchase that get added to your basis. The accuracy has been spot-on in my experience. While a CPA might catch certain things through conversation, this tool actually applies the exact same tax code analysis that a tax professional would, but it's much more thorough with documentation. I actually showed the report to my accountant and he was impressed with how comprehensive it was. The difference is that this focuses specifically on real estate transactions rather than general tax advice.

How does this even work? I've been trying to call the IRS for months about my amended return and always get the "due to high call volume" message before they hang up on me. Does this service somehow get you through the phone tree faster?

Yeah right. No way this actually works. I've been calling the IRS for 3 months straight about an issue with my tax refund and they NEVER pick up. You're telling me this service somehow magically gets through when millions of people can't? Sounds like a scam to me.

It works by continuously calling the IRS line for you and navigating the phone tree automatically. When you call the IRS normally, you often get that "due to high call volume" message and get disconnected. Claimyr's system keeps trying until it gets into the queue, then it calls you and connects you directly to that spot in line. I totally understand the skepticism - I felt the same way. The IRS only accepts a certain number of calls in their queue at any given time, so most people get rejected immediately. This service basically keeps trying until it finds an open slot, which can happen randomly throughout the day. It's not magic, just persistence and technology. I was connected in about 15 minutes, but they say it can take up to an hour sometimes depending on call volume.

Good point about the improvements! For the first house, I actually did replace the roof ($14k) and installed a new HVAC system ($9k). Would I need receipts for all of these improvements or are there other ways to document these if I can't find all the paperwork?

Receipts are definitely the best documentation, but if you don't have them all, there are other options. Bank or credit card statements showing payments to contractors can work. Even emails confirming quotes that you accepted can help establish the costs. For major improvements like a roof or HVAC system, you might also have permit records with your local building department that can verify the work was done. Some contractors might also have records they can provide if you reach out to them. The IRS knows people don't always keep perfect records, but they do expect you to make a reasonable effort to document these costs.

Not necessarily. The test is whether you lived in it as your primary residence for 2 of the 5 years before selling. Who lives in it during other periods doesn't affect that qualification. If OP had rented it out, there might be some depreciation recapture to deal with, but since no rent was collected, that's not an issue.