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Phillip B, EA
Phillip B, EA, Enrolled Agent
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Experience:  Practicing since 2004. Expert in 1040, small business, represent vs. IRS, & int'l tax mattters.
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Can I qualify for a partial capital gains exclusion to selling

Resolved Question:

Can I qualify for a partial capital gains exclusion to selling my home due to a job change 2 years prior? The IRS documents do not state there is a time limit on why I am selling my home after a job change 2 years ago. I am truly selling because I moved but it took me 2 years before I put it up for sale.
Submitted: 2 years ago.
Category: Tax
Expert:  Phillip B, EA replied 2 years ago.
Given the facts you have provided and the circumstances in the housing market, you should qualify for the reduced maximum exclusion.

Per Treasury Regulations, there is a safe harbor for changes of employment if the employment change occurs during the period of ownership and the period that the home is used as your primary residence. The change of employment happened while you were living in the house and the sale of the home is occurring during the 5-year ownership period, therefore it appears that you qualify for the reduced home sale exclusion.

Be advised, that you may end up with less of an exclusion if the home was being rented during the 2 years since you moved out. See nonqualified use at: http://www.irs.gov/publications/p523/ar02.html#en_US_2010_publink1000240774 for more details.
Customer: replied 2 years ago.
I made a mistake in the info I provided you. I apologize.

It has been 4 years not 2 years since I moved and it has been rented all that time. Does the partial exclusion still apply?
Expert:  Phillip B, EA replied 2 years ago.
Because of the nonqualified use, any exclusion would be extremely limited if there was any exclusion at all. Assuming that the home was owned for 5 years ending on the sale date, you would have to allocate 80% of the gain to nonqualifed use (which would make at least 80% of the gain not eligible for the exclusion).

Sorry for the bad news.
Phillip B, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 647
Experience: Practicing since 2004. Expert in 1040, small business, represent vs. IRS, & int'l tax mattters.
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Phillip B, EA
Phillip B, EA
Tax Advisor
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Practicing since 2004. Expert in 1040, small business, represent vs. IRS, & int'l tax mattters.