Thinking ahead can save you
Many owners alternate between living in two or more areas; e.g., a number of our clients live in Hawaii for about six months of the year and on the Mainland for the remainder. An owner can only have one primary residence at a time. There are a number of factors used to establish the principal residence for such owners, such as:
- The length of occupancy in the two homes
- The place of employment
- The principal place of abode for family members
- The address used on the taxpayer’s federal and state tax returns
- The address where the taxpayer is registered to vote
- The location of taxpayer’s bank(s)
- The address used for automobile and driver’s license registrations
- The location of the taxpayer’s religious organizations and recreational clubs.
Our experience indicates that most absentee owners that alternate between living in Hawaii and on the Mainland consider their Mainland home to be their principal residence. If an owner were considering selling their Hawaii home, they might want to shift their principal residence to Hawaii for at least two years to qualify for an exclusion of gain, particularly if the length of stay in Hawaii and on the Mainland were reasonably similar. Refer to the article in this section titled Important Tax Information.
You don’t actually have to be in Hawaii for all 24 months, but you do need to do the things that would qualify the Hawaii home as being your principal residence. For example. When an owner with a Mainland principal residence lives for part of the year in Hawaii or goes on an extended vacation, the principal residence is not changed.
Then, you could sell it, claim the $250,000/$500,000 exclusion and shift your principal residence back to the Mainland. It is important to keep in mind, though, that you can only have one principal residence at any given time.
- Richard Gavino, sold his Kaneohe home
In light of the sinking economy and depressed housing market The Stott Team of Professionals came through with flying colors! They kept me abreast of every transaction that occurred during the sale of my property with the goal of doing the right thing for their client. We encountered several set backs, but with the Can Do Attitude of The Stott Team, these were overcome resulting with the posting of the SOLD sign on the property. The words to describe The Stott Team are: One Stop Shopping; Can Do Attitude; Open Communication; Thoroughness; Attention to Details; Conscientious; Perseverance; Professional. Thank you-Mahalo Stott’s Warmest Regards,