Principal Residence

DEFINITION of 'Principal Residence'

The primary location that a person inhabits. It doesn't matter whether it is a house, apartment, trailer or boat, as long as it is where you live most of the time.

BREAKING DOWN 'Principal Residence'

You can usually avoid capital gains on the sale of your principal residence, provided you buy another place of equal or greater value that is going to become your new residence.

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RELATED FAQS
  1. Do we pay capital gains taxes on the profit if we sell the house?

    We have lived in our house in Washington state for 4.5 years, but we have only owned it for 1 year. ... Read Answer >>
  2. Do I have to pay capital gains tax if I invest my equity into a new home?

    I have owned and lived in my home for 14 months. I want to sell it and move into a bigger home. Can I invest my equity into ... Read Answer >>
  3. What will be the tax on the sale of transferred property?

    My sister bought a house valued at $250,000. A year later, she transfers the title of the property to me. I want to live ... Read Answer >>
  4. Will we need to pay capital gains tax on our home that we owned for less than a year?

    We are in Texas. We bought a house 10 months ago with a sales price of $255K. We put a down payment of $75K on it. We ... Read Answer >>
  5. My wife and I both converted our Traditional IRAs to Roth IRAs in Dec 1998 and have ...

    You and your spouse each qualify for a penalty-free distribution of up to $10,000 for the purchase, acquisition or construction ... Read Answer >>
  6. What are my risks of buying a house?

    I am 21, free of any kind of debt, and have saved up 120k for a down payment. I will still have some emergency fund after ... Read Answer >>
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