Accepted Answer

Hello again Herbert,

I am getting ready to leave the forum, so since I have not heard back from you with the additional information, I will still try to address your question.

If you have a property which you have owned for at least two years, and if you have also lived in that property for at least 2 of the last 5 years as your primary residence, then when you sell the property you would be able to claim the allowed exclusion for a primary homeowner. That exclusion is $250,000 for a single person and $500,000 for a married couple filing a joint return.

It will not matter if you turned the home into a rental property. The exclusion still applies as long as you can satisfy the ownership and use rules. So it will depend on exactly when you moved out of this home and when you actually sell it. If you moved out of the home in August of 2007 after having lived there for at least 2 years, then you would have until August of 2010 to sell the home and still satisfy the 2 out of 5 year rule. So what you need to do is take the date you actually moved out of the home and then figure that you must sell the home within 3 years of that date to still satisfy the use requirement.

If this was helpful please press the Accept button.

Thank you Herbert and let me know if you have more questions. I will be back in the forum later this afternoon and will address any follow up questions you may have.

Expert:	Merlo
Pos. Feedback:	99.8 %
Accepts:
Answered:	10/17/2009

Accountant

25+ years tax consulting. Specializing in returns for US citizens living abroad