All Forum Posts by: Freeman W.

I've owned (and lived in) my property for the last 4 years. Soon I will be knocking the old house down and building a new house on the property. According to the tax code, in order to qualify for the capitol gains exemption ($500k married) you must pass the "ownership test" of owning the property for 2 years and pass the "use test" of living in the property for 2 years.

Say I wanted to sell the newly built house immediately after it was built, would my 4 years of living in the old house on that property qualify my for the "use" and "ownership" test? Or do I have to live in the new house for 2 more years since its a new mortgage?

Thanks for your responses guys! Bill to answer your question yes I have already taken the credit and yes I used the credit on the house I'd like to tear down. Steven, to follow up with you I would be selling the other portion rather than using as a rental. Not sure that this matters but I wanted to clarify. It seems as if I'll need to wait until August to start my project.

I bought a house I'm hoping to tear down and replace with two town homes (my street is zoned for this). I intend to sell one side and live in the other. Since I am retaining ownership of half the property, do I have to pay back the $8000 first time home buyers credit?