Should I make my shore home my primary residence?


Q. My wife and I own a home in Passaic County and a home at the beach in Ocean County. We are both retired and the Passaic County home is our primary, but the market value of the home in Ocean County is substantially higher. Are there any advantages to changing our primary residence to the more valuable property in Ocean County?
— Homeowner

A. The only clear financial advantage, and it’s a big one, would come if you decide to sell the Ocean County home.

Internal Revenue Service code allows for the first $250,000 of gain — $500,000 for a married couple — on the sale of your principal residence to be forgiven.

To take advantage of this you would have to have maintained the home as your primary residence for 24 out of the previous 60 months, said Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown.

The 60-month period ends on the day you sell the home, Kiely said.

“You probably meet the twenty-four month rule for your Passaic County home,” he said. “So if your intentions are to sell your Passaic County home you are good to go.”

But what happens if you also want to ultimately sell your Ocean County home?

If you sell it now, all the gain would be subject to federal and New Jersey income taxes, Kiely said. “

If this is your intention, I recommend you immediately change your residence to Ocean County, so you can start the 24-month clock,” he said. “After residing in Ocean County for 24 months, the first $500,000 of gain of your and your wife’s Ocean County home would be free of tax.”

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This story was originally published on Sept. 14. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.