Temporary Absence Exception & Home-Use Test
Generally, taxpayers must occupy their residence (except for short temporary absences) for at least 2 years during the 5-year period ending on the date of the sale or exchange in order to take advantage of the home sale exclusion.
Exception – Temporary Absence - However, short temporary absences, such as for vacation or other seasonal absence (even though accompanied with rental of the residence), are counted as periods of use. (Reg. §1.1211(c)(2)(i)) Two-month vacations are short temporary absences, but a one-year stay abroad (e.g., while on sabbatical) is not. (Reg. § 1.121-1(c), Exs. (4) and (5))
“ Example: John and Maria celebrate John’s retirement by taking a two-month tour of the Western United States in their motor home. They were concerned about leaving their home vacant, so they rented it out while they were gone. Under the temporary absence rule, their use period includes the 2 months they were on their road trip even though the home was rented out while they were absent. ”
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