I am selling a house that I have lived in for 20 months. Obviously, I don't expect to gain anywhere near $250,000. I understand that I'll need to pay capital gains. I was under the impression that the $250,000 exemption was pro-rated by month, but now I'm not finding anything to that effect on the IRS web site. Are all gains taxable if the seller hasn't lived in the property for 24 months?
I'll try to hold of on closing on the sale until I've owned the property for 24 months, but I'll be more likely to sell early, if I can pay tax on a smaller portion of the gain versus the entire gain.
Thanks, LLS