Capital Gains tax on primary residence that has been rented out

[Teresa Rad]

Hi, I have question about what is considered your primary residence. I own an apartment that I lived in for about 8 years before moving out to rent a home with my new husband (apartment was too small for us both) while we save to buy a home together. 5 years later, I want to sell my apartment and use that money to buy a home together, but now I have to face the capital gains tax implications.

Since I moved out but did not buy a second home and instead, my husband and I have been living in a rental - is the apartment that I own considered my primary residence (since it was for 8 years prior) and therefore, can I avoid or minimize the capital gains tax? It seems at odds with the fact that we don't own a 2nd home but live in a rental, but maybe that doesn't matter? Would appreciate if anyone has any advice about this situation.

thanks!

[Steve Archer]

I believe the rule is you have to live there for 2 of the last 5 years. Whether you subsequently lived in a rental or in a cave that doesn't matter. You didn't live in the apartment. Would you consider a 1031 or refinancing in order to avoid/delay the gain?