Tax implications of purchasing a new home while still owning previous primary residence

You've got the basics covered, but there are some nuances to consider. The good news is that you're handling the main parts correctly - claiming the new home as your primary residence and tracking the mortgage interest deduction via your 1098. One thing to note is that you can deduct property taxes paid on both properties, not just the old one. Both are considered personal residences until you sell the first one, so both qualify for the property tax deduction (subject to SALT limits, of course). When you do sell your old home, you'll likely qualify for the primary residence capital gains exclusion ($250K for singles, $500K for married filing jointly) as long as you lived in it for at least 2 of the past 5 years before selling. This means you probably won't owe any taxes on the profit from selling your old house. The temporary ownership of two homes itself isn't a tax issue - many people are in this situation during transitions. Just make sure you're correctly documenting which is your primary residence for tax purposes.

You're on the right track with your approach! The good news is that owning two homes temporarily during a transition period is fairly common and not overly complicated from a tax perspective. Since you're planning to make the new home your primary residence, you were correct in designating it as such in TurboTax. Just remember that you can actually deduct property taxes for both properties (subject to the SALT deduction limits, of course), not just the old one. When you do sell your former primary residence, you'll likely qualify for the capital gains exclusion ($250,000 for single filers, $500,000 for married filing jointly) as long as you've lived in that home for at least 2 of the 5 years preceding the sale. This means you probably won't owe any taxes on the profit when you sell your old house. The main thing is to be consistent in how you treat both properties and maintain good records about when you officially changed your primary residence.

After struggling with a similar two-home situation last year, I found this amazing AI tool that analyzes your property documents and gives you personalized tax advice. It's called taxr.ai (https://taxr.ai) and it actually explained all the nuances around mortgage interest deductions and property tax implications for multiple properties. I uploaded my mortgage docs, property tax statements, and answered a few questions about my timeline for owning both properties. The tool explained exactly how to maximize my deductions while staying compliant. It also walked me through the capital gains exclusion rules for my primary residence in really clear language. What impressed me most was how it flagged a potential issue with my SALT cap limits that I would have completely missed. It even generated a custom report I could share with my accountant.

I dealt with almost the exact same situation last year and found this amazing tool called taxr.ai (https://taxr.ai) that completely cleared up my confusion. I had two properties at once while transitioning, and wasn't sure how to handle everything properly on my taxes. I uploaded my mortgage documents, property tax statements, and closing paperwork from both homes to taxr.ai, and it analyzed everything to give me personalized tax guidance. It explained exactly which deductions I qualified for during the overlap period and how to properly document my change in primary residence. The tool even identified a mortgage interest deduction I would have missed because my lender sent a corrected 1098 that I hadn't noticed. It also provided clear guidance on the capital gains exclusion rules for when I eventually sold my old place.

I was skeptical about taxr.ai at first, but I decided to try it since my two-property situation with the partial rental was getting confusing. I'm actually really impressed with how thorough it was! It identified that I needed to prorate my property tax deductions based on the months I used each property as personal vs. rental. The tool also flagged something I hadn't considered - that the period I rented my old house meant I needed to report the income on Schedule E and could deduct certain expenses against that rental income. It even calculated my depreciation for that brief rental period which my regular tax software completely missed. For anyone juggling multiple properties with different uses throughout the year, it's definitely worth checking out. Saved me a lot of headaches and probably some money too!

I was skeptical about taxr.ai when I first read about it, but I decided to try it since I was completely confused about tracking all my home improvements for my cost basis. I'm really glad I did! The tool helped me organize all my renovation receipts and clearly showed which ones actually count toward increasing my cost basis (turns out my kitchen remodel counted but regular maintenance didn't). It even helped me estimate values for

If you're having trouble getting answers from the IRS about your specific two-home situation, I highly recommend using Claimyr (https://claimyr.com). I was stuck on hold for HOURS trying to get clarification about how to handle my property taxes on both homes, and no one was picking up. Then I found Claimyr, watched their demo (https://youtu.be/_kiP6q8DX5c), and decided to give it a shot. Within 30 minutes, I was actually talking to a real IRS agent who walked me through exactly how to document everything correctly for my situation. They basically hold your place in the IRS phone queue and call you when an agent is about to answer. It saved me literally hours of hold music and frustration, and I got the answers I needed about my specific situation straight from the source.

OK I'm shocked but I have to admit Claimyr actually worked. After posting that skeptical comment, I decided to try it anyway because I was desperate for answers about how to handle the sale of my former primary residence while owning a new one. Got connected to an IRS agent in about 40 minutes (without me having to sit there listening to hold music). The agent clarified exactly how the 2-out-of-5-year rule works for the capital gains exclusion and confirmed I could take property tax deductions for both properties in the overlap period. They also explained how to document my official change of primary residence for tax purposes, which none of the online articles I read had covered clearly. Not having to waste half my day on hold was absolutely worth it. Definitely taking back my skepticism.

One thing to watch out for: if you're getting any rental income from either property (even short-term like Airbnb), make sure you're reporting it correctly. I made this mistake last year when I temporarily rented my old house while getting ready to sell it, and didn't realize I needed to file Schedule E. Also keep all receipts for improvements on your old house before selling. They add to your cost basis and could reduce any potential capital gains (though with the exclusion you mentioned it probably won't matter unless your gain is massive).

Anyone know if TurboTax Premier handles this situation better than the Deluxe version? I'm in almost the identical situation as OP but wondering if it's worth upgrading for the real estate features.

Don't forget to update your address with the IRS using Form 8822 when you officially move! This isn't directly tax-related but will ensure any correspondence about your return goes to the right place. Especially important if you're expecting any refunds or notices. Also make sure your local tax assessor knows which property is your primary residence - in some areas you get different tax rates for primary vs. secondary homes. This won't affect your federal return but could impact your property tax bills.

Just wanted to add one more consideration that might be relevant - if you're itemizing deductions, make sure you're aware of the SALT (State and Local Tax) deduction cap of $10,000. Since you're paying property taxes on two homes now, you could potentially hit that limit faster than expected. Also, if you have any mortgage points or closing costs from your new home purchase, some of those might be deductible in the year you bought the house. TurboTax should catch this, but it's worth double-checking that all your closing cost documents were properly entered. The temporary two-home situation really isn't a big deal tax-wise - you're handling it correctly by treating the new place as your primary residence and tracking all the appropriate deductions for both properties during the overlap period.

You're definitely on the right track with how you're handling this situation! The temporary overlap of owning two homes during a move is actually quite common and not problematic from a tax perspective. A few additional points to consider: **Documentation for primary residence change:** While there's no specific IRS form, it's helpful to maintain a paper trail showing when you made the transition. This includes updating your driver's license, voter registration, and using your new address on official documents. This creates a clear timeline if you ever need to prove which property was your primary residence during specific periods. **Timing considerations:** Since you owned your old house outright and then took on a mortgage for the new one, make sure you're only claiming mortgage interest deductions for the periods you actually owned the new home. TurboTax should handle this automatically based on your 1098 dates. **State tax implications:** Don't forget to check if your state has any specific rules about primary residence changes or property tax benefits that might be affected by your move. Some states offer homestead exemptions that you'll want to transfer to your new property. The fact that you're being methodical about tracking everything suggests you're handling this correctly. Just keep good records of all the dates and expenses, and you should be fine!

You're handling this transition really well! As a newcomer to this community, I wanted to share some additional insights that might be helpful for your situation. One thing I don't see mentioned yet is the importance of keeping detailed records of your moving expenses and the timeline of when you actually started living in each property. While moving expenses aren't generally deductible anymore for most people, having clear documentation of when you physically moved can be crucial for establishing your primary residence timeline. Also, since you mentioned it's taking longer than expected to prep your old house for sale, consider whether any of the preparation costs (like staging, repairs specifically for sale, or real estate commission) might affect your capital gains calculation when you do sell. While you'll likely qualify for the exclusion as others mentioned, it's still worth tracking these selling expenses as they can reduce your taxable gain. The temporary two-home ownership is definitely normal during transitions - I've seen this situation frequently, and you're approaching it correctly by being thorough with your documentation and asking the right questions. Keep doing what you're doing!

As a newcomer here, I wanted to add something that might be helpful for your situation. Since you mentioned using TurboTax, make sure you're taking advantage of the interview process to capture all the nuances of your two-property situation. One thing that often gets overlooked is that you can deduct property taxes paid on both properties during the overlap period, but you need to be careful about the timing. Make sure you're only deducting the property taxes you actually paid in 2024, not what was assessed or due. If you paid some 2025 property taxes in late 2024 (which sometimes happens with tax bills), those can be deducted in 2024 too. Also, since you owned the old house outright, double-check that you're not accidentally trying to claim mortgage interest on a property with no mortgage - it sounds like you've got this right, but it's a common mistake when people are juggling multiple properties in tax software. The gradual transition approach you're taking (moving slowly while preparing the old house for sale) is actually ideal from a tax perspective because it creates a clear timeline showing your intent to make the new house your primary residence. You're definitely handling this correctly!