Duplex - Live in Flip

[Jaren Woeppel]

Hello BP Community!

I had a question about a live-in flip pertaining to a duplex. This is going to be kind of "off the cuff" so if there are some inaccuracies, please let me know.

Alright, so the beauty behind a live-in flip is that it is your primary residence and I believe if you have lived in it as your primary residence for 2 of the last 5 years, you are able to sell the property, up to a certain limit, without capital gains tax.

If you lived in one side of a duplex and rented out the other, I believe the same rules apply but you would only be able to take advantage of half of the benefit because only half was your primary residence.

My question is, is it possible (legal) to live in one side for 2 years and fix that side up, move to the other side for 2 years and fix it up, then sell the duplex within a year so you would still have each side your primary residence for 2 of the last 5 years and be able to capture both sides as a primary residence exemption?!?

I've never heard of that being a strategy and I am assuming the BP community has thought of this before. I would like some feedback as to why or why not this would be an acceptable tactic.

Thanks!