ANSWERS: 2
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I live in wyoming and just bought a house i got a 80/20 loan so that my taxes and insurance and paid with my payment i will not have to come up with the money all at once i think it is a very good idea and was worth looking in to.
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A married couple can exclude up to $500,000 in capital gains on the sale of their principle residence. However the criteria for this exemption is that you have lived in the house (while owning it) for 24 out of the last 60 months. You do not meet that criteria. According to the IRS website, there are certain exceptions to the 24 month requirement when a change of employment, health, or other unforeseen circumstances has occurred. I do not know whether the expansion of your family would meet one of these exceptions. In these cases, I believe that the exemption amount is prorated. The fact that you are or are not using the money to put down on another house is a moot point; that is no longer in the IRS code. This is definitely something you should discuss with an accountant.
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