What is my principal residence?

Your principal residence, also known as your main home, is the home you live in most of the time. It can be a house, houseboat, mobile home, cooperative apartment, or condominium.

In addition to the amount of time you spend in the home, the other the factors used to determine your principal residence include

your place of employment

the location of your family members’ main home

the mailing address for bills and correspondence

the address on your tax returns, driver’s license, etc.

You can generally avoid paying capital gains tax on the sale of your principal residence. But you must have lived in the property as your main home for at least two years out of the five year period that ends with the date of the sale. If you have more than one home, you can only exclude gains from your main home.