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Ask R. Greg Paszkiewicz Your Own Question
R. Greg Paszkiewicz
R. Greg Paszkiewicz, Enrolled Agent
Category: Tax
Satisfied Customers: 357
Experience:  9 years preparing tax returns - Marietta, GA
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Military exemption for sale of home

Customer Question

Hi With the change to capital gains tax for sale of homes for those in the military, is it retoractive to those that were on military service but have since retired (i.e. if I rented my house while on active duty and was unable to reside in the home because of military obligation and then sold it in 2004 after retiring in 2002)would I still be eligable to be exempt?? Here is a little more detail: I purchased a house in Texas in 1992, I resided in the house as my primary residence until Oct 1998 when I was deployed on military orders to Germany. I rented the property while in the military. I retired from the military in Sept 2002 but continued foreign service until Nov 2003 at which time I moved to Florida with the rental in Texas. I sold the property in Dec 2004 during this tax year. Due to military service overseas (1998-2002 and then foreign service 2002-2003) I was unable to meet the 2 year residence requirement. Can I claim any tax exclusion after selling the property in 2004? Currently H&R block indicates I must claim all parts of the sale of the property and the depreciated value claimed in previous tax years while serving in the military.
Submitted: 11 years ago.
Category: Tax
Expert:  R. Greg Paszkiewicz replied 11 years ago.
Keith, you might want to re-post your question at a lower dollar amount. I've noticed that if a question has "too high" a value on it people ignore it assuming the questioner won't pay. Block strikes again! as if I needed any more proof.
Customer: replied 11 years ago.
Reply to R. Greg Paszkiewicz's Post: Well considering I'm losing $4000 if I can't get an answer that would provide what will assist in my issue, I'm VERY willing to cover the amount I stated
Expert:  Jon Andrews replied 11 years ago.

Code Section 121(d)(9)(A) allows a member of the military to suspend the five year period during the time that the individual is unable to reside in the house due to serving active duty or U.S. Foreign Service.


Based on the information in your post, you can elect to suspend the five year period, at a minimum, from October 1998 through September 2002. Then, even if your retired foreign service time does not count, the five year period would begin running again. So....September 2002 - December 2004 is 26 months. Add 34 months ending in October 1998 to get your 5 year period. If you lived in the house as your principal residence for at least 24 months of the 34 months that ended October 1998, you may exclude the gain per above.


If you need additonal information or clarification, please let me know.


[email protected] 
Expert:  R. Greg Paszkiewicz replied 11 years ago.
Jon is correct as usual, I would only add that you do have to recapture the depreciation you took when the property was a rental. Any additional gain is excludable up to 250k (500k if MFJ). I meant no offense on my re-post suggestion, just trying to help you get an answer to your question.

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