Does the new law affect the definition of “principal residence?
” A. Yes. Under the old law, it simply had to be the house you lived in most of the time. Now it’s a rule that says you have had to own and use the home as your principal residence for two out of the five years prior to sale. That probably is going to be a more relaxed standard and easier to get under a definition of a principal residence than it was under the old law. Q. How does this affect jointly owned property where couples are splitting up? A. If you have situations where couples are separating, one spouse has been out of the house for a while and it’s sold a year and a half after that person moved out, they are still going to be able to use the capital gains exclusion. Under the old law, divorcing and separating couples had some real exposure on things like that. This also affects couples where people are moving into a nursing home and the family’s individual or spouse didn’t sell their residence because they were hoping to move back. Now, as long as you’ve sold it within three
