How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask jgordosea Your Own Question

jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3068
Experience:  I've prepared all types of taxes since 1987.
3653323
Type Your Tax Question Here...
jgordosea is online now
A new question is answered every 9 seconds

home sale exclusion on gain

Customer Question

hi, my wife and I sold our house in Colorado 6/15/12. We used the exclusion since we had lived there for 10 years. We moved to California and bought a house 10/25/13 (new job). The job is not working out and we want to sell this house and move back to Colorado. I believe we will have a gain of about $60,000 on the California home. How can we avoid getting taxed on that gain? Jim

Submitted: 1 year ago.
Category: Tax
Expert:  jgordosea replied 1 year ago.
Greetings,

As you may be aware, the exclusion of gain from a principal residence can only be used once every two years (in addition to the requirements to own and occupy the residence for two of the five years prior to the sale).
So, you would need to own and occupy the California house for two years in order to use the full exclusion in addition to having used the exclusion for the Colorado house.

There is provision for possibly using a reduced maximum exclusion when the sale of your home was due to one of the following :
1)A change in place of employment.
2) Health.
3) Unforeseen circumstances.

For details and examples of each allowable le reason for a reduced exclusion see http://www.irs.gov/publications/p523/ar02.html#en_US_2012_publink1000200747

One possibility might be if you get employment in Colorado while you are still using your California home as your main home that change of employment could allow for a partial exclusion of gain on the sale of your Colorado home.

The formula for the partial exclusion is a bit involved, but a copy of the worksheet is on page 34 of the publication at http://www.irs.gov/pub/irs-pdf/p523.pdf

Basically you will first take a ratio of the days in the new home divided by 730 days and multiple that ratio times the maximum 500,000 for a married filing joint couple.
So, if you are in the new home for 146 days the ratio is 146/730 = .2 and the maximum exclusion is 100,000.

Secondly you have to make a similar ratio of how long it has been since the sale date that the exclusion was previously used used. The difference in the sale dates is divided by 730 to find that ratio.

Then, the lesser of the two ratios will be multiplied times the maximum exclusion to find your partial exclusion.

You can exclude the gain from a second primary home if the sale is due to 1)a change in place of employment 2) health or 3) unforeseen circumstances but can only use a partial of the maximum of 500,000 for married couples.

From you description, if you sold the Colorado home and moved to California in October 2012 the partial exclusion will be more than 60,000 and can be deducted if the move is for a change in employment (while you are still occupying the new home).

Please ask if you need clarification.
Thank you.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
 
 
 
Chat Now With A Tax Professional
jgordosea
jgordosea
Tax Professional
3068 Satisfied Customers
I've prepared all types of taxes since 1987.