I bought a house in May 2005 and I understand that I can't sell it until May 2007 without paying capital gains. The house is worth much more than I paid for it. Currently, I am in the process of buying another house which will become my primary residence but I don't plan on living in it until after May 2007 since it needs total rennovation and I can afford both mortgages in the meantime. No one will be living in the second property in the meantime. What would the second house be classed as since I can't have two primary residences? And if I sell the first house before the two years are up, is there less of a penalty if I sell the property say at 1 1/2 years as opposed to 1 year? In other words, is it best to be closest to two years as possible if you aren't going to wait until the two year mark? This is in the state of PA by the way...Thanks!