Establishing Your Primary Residence when Buying a Second Home

When it comes to purchasing a second home, you are going to need to establish your primary residence. This can help you when it comes to selling one of the properties and taking advantage of a capital gains tax exemption. Here are the basics of how to establish your primary residence when buying a second home.

Identification

One of the best ways that you can establish your primary residence is to obtain identification in that area. If you get your driver's license from a particular area and use your primary residence address on the license, this is going to help your case of establishing your primary residence.

Tax Documents

The IRS is also going to look at what address you use when you file your taxes and other important documents. If you have two different residences, you should choose the primary one for receiving all of your important financial documents.

Banks

The IRS will also take into consideration where your financial institutions and banks are located. If you do business with several different financial institutions in the same area, this can signify that this area is your primary residence.

Majority of Time

According to the IRS, the residence where you spend the most time throughout the year is your primary residence. If you spend 35 weeks in one house and 17 weeks in another, the house where you spend 35 weeks would be your primary residence.