What is a "home burial?

What's the definition of "main home" for tax purposes?

• I am married and currently live in Texas where my wife and I just bought a condo. However, I might be accepting a job offer in California soon. If I do, I plan to work in California and rent a studio apartment while my wife lives in our home in Texas. Until she moves to California, I plan to fly back every other weekend, and she will fly out to California on alternate weekends to visit. I don?t know how long this transition period from Texas to California will take. Real estate is obviously expensive in California and it might take several months, maybe even a year or more, to find the right home to buy in California, at which time we would sell our home in Texas. Even though I will be working in California, renting a studio apartment, will hold a California driver?s license, register my vehicle in California (I don?t want to drive illegally because I think there is a limited period of time where you can drive with out-of-state licenses and tags), I still consider the home in Texas to be my main home since I?ll continue to pay the mortgage and taxes, and will be coming back every other weekend. In addition to the work I?ll be doing in California, I am an officer of a Texas-based company with my wife, and she will continue to run the business from Texas while I manage parts of the business from California (do the books, run the Web site). The inventory for our business is also stored near our home in Texas. I have read Publication 523 ("Selling Your Home"). When I ultimately sell my Texas home, I plan to use the "Reduced Maximum Exclusion" (page 14) to pro-rate the tax free gain of my Texas home (up to $500,000 for married filing jointly) because of the exception granted for a change in employment. I plan to use Worksheet 3 (page 15 of Publication 523) to calculate how much I can exclude from taxable gain of my Texas home when I sell it. I will use the number of days (as opposed to months) since the number of days I will physically be in my Texas home each month will be 5-7 days per month, plus my allotted vacation time will be spent there, and I don?t want to get in trouble with the IRS by interpreting that amount of time as a full month. My wife will apply 30 days as the time she made our Texas home her "main home" since she will be there almost all the time. I?m just trying to pick up a fraction of the exemption on my side for the 5-7 days I?m there a month. I will keep receipts of my travel expenses and purchases made in Texas during those weekends to show I was physically in Texas during those days. I think it?s important to note that this worksheet does not ask about "number of days as a legal resident," but instead asks, "number of days you used the property as a main home..." So the definition of "main home" is the crux of the question under this scenario. I consider my home in Texas to be my main home during my transition period since my wife lives there, I will be spending some of my time there (20% of my time), almost all my possessions will be there, and we are running a company based in Texas. I have read all of the IRS information I can, and I don't see anything in there related to this kind of situation. I just want to make sure I?m not going to get in trouble with the IRS using this interpretation of "main home" because of the what I have described above: - I will be working in California most of the time (except for 5-7 days a month, where I will work remotely from Texas two of those days), paying taxes there, and have a driver's license and car registered there. - I don?t know how long the transition period will take. It could take a year or more, at which time we?ll sell our home and calculate the exemption based on the date we sold our home in Texas.

• Answer:

  Dear ballclub-ga Thank you for allowing me to answer your interesting question. The term ?main home? is described in the introductory material to IRS Publication 523. Simply put the publication says, ?Generally, your main home is the one in which you live most of the time.? IRS PUBLICATION 523 http://www.irs.gov/publications/p523/ar01.html The publication goes on to more definitively describe ?main home? under the section aptly entitled, ?MAIN HOME?: ?This section explains the term ?main home.? Usually, the home you live in most of the time is your main home and can be a: House, Houseboat, Mobile home, Cooperative apartment, or Condominium. To exclude gain under the rules in this publication, you generally must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date of sale. Land. If you sell the land on which your main home is located, but not the house itself, you cannot exclude any gain you have from the sale of the land. Example. On March 4, 2005, you sell the land on which your main home is located. You buy another piece of land and move your house to it. This sale is not considered a sale of your main home, and you cannot exclude any gain on the sale of the land. Vacant land. The sale of vacant land is not a sale of your main home unless: The vacant land is adjacent to land containing your home, You owned and used the vacant land as part of your main home, The sale of your home satisfies the requirements for exclusion and occurs within 2 years before or 2 years after the date of the sale of the vacant land, and The other requirements for excluding gain from the sale of the vacant land have been satisfied. If these requirements are met, the sale of the home and the sale of the vacant land are treated as one sale and only one maximum exclusion can be applied to any gain. See Excluding the Gain, later. More than one home. If you have more than one home, you can exclude gain only from the sale of your main home. You must include in income gain from the sale of any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time. Example 1. You own and live in a house in the city. You also own a beach house, which you use during the summer months. The house in the city is your main home. Example 2. You own a house, but you live in another house that you rent. The rented house is your main home. Factors used to determine main home. In addition to the amount of time you live in each home, other factors are relevant in determining which home is your main home. Those factors include the following. Your place of employment. The location of your family members' main home. Your mailing address for bills and correspondence. The address listed on your: Federal and state tax returns, Driver's license, Car registration, and Voter registration card. The location of the banks you use. The location of recreational clubs and religious organizations you are a member of. Property used partly as your main home. If you use only part of the property as your main home, the rules discussed in this publication apply only to the gain or loss on the sale of that part of the property. For details, see Business Use or Rental of Home, later.? http://www.irs.gov/publications/p523/ar02.html#d0e343 It appears then that by the IRS?s definition your main home will be your California residence, regardless of your Texas state residency, since that?s where you will PHYSICALLY and PRIMARILY reside. If you require an absolute confirmation of this fact, you may contact the IRS support Center and provide them with details that almost certainly would not have if they were to ask for them, or I would have called them on your behalf. Live Telephone Assistance Call 1-800-829-1040 Live Telephone Assistance for Businesses Call Toll-free, 1-800-829-4933 Live Telephone Assistance for people with hearing impairments 1-800-829-4059 (TDD). (Hours of Operation 7:00 a.m. to 10:00 p.m. Monday - Friday). I hope you find that my answer exceeds your expectations. If you have any questions about my research please post a clarification request prior to rating the answer. Otherwise I welcome your rating and your final comments and I look forward to working with you again in the near future. Thank you for bringing your question to us. Best regards; Tutuzdad-ga ? Google Answers Researcher [INFORMATION SOURCES] Defined above [SEARCH STRATEGY] SEARCH ENGINE(S) USED: Google ://www.google.com [SEARCH TERMS USED] IRS MAIN HOME PRIMARY RESIDENCE PUBLICATION 523