[cleveman]

I have a home which I can sell tax free. I have lived in it for 2 of the last 5 years. I would like to sell on contract and have the balance of the contract due in 3 years.

The reason for this is that after 3 years, maybe the payments will no longer be tax free because at that point I haven't lived in it for 2 of the last 5 years.

Or will they still be tax free for longer than 3 years, that is the question. Which way of thinking is correct with the IRS?

 

[cleveman]

OK, I learned the answer as if anyone cares.

The interest portion of the payments is taxable from the get-go and the principal portion is always free.

This makes perfect sense to me.

I'm still not sure that the contract sale is much better than renting. You get some money down and don't need to pay taxes and insurance, and maintain the property, but you don't get any depreciation.

We'll see.

 

[bradgunn]

I noticed you responded to your own question.
I once posted a question and to this day no one has responded. I like your style.

(About that question - do you have someone who does taxes?)