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Client purchased duplex rental property in 2016 (property #1). Half was used as personal property and half used as rental. In 2021, client moved out of first property, made it 100% rental and purchased another duplex (property #2) which became their primary residence (similarly 50% rented). In 2023, property #1 was sold – an exclusion was taken at 50% since it was primary residence for two of the five years prior to sale (2019 and 2020). In 2024, Property #2 was sold which they considered primary (50%) since purchasing in 2021. Is this second property sale eligible for gain exclusion on the personal portion? Or would the two year limit apply?
Other factors –They sold property #2 and moved over 1,200 miles away and bought another property (not a rental). individual retired from the military in 2023 and had up to one year from the date retired to use government -paid move. Would any of these other factors be considered as an exception to the two-year limitation?