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Ask Lane Your Own Question
Category: Finance
Satisfied Customers: 12009
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I have a real estate question, specifically about IRS pub.

Customer Question

I have a real estate question, specifically about IRS pub. 523
JA: The accountant will know how to help. Please tell me more, so we can help you best.
Customer: In the section "How to Figure Your Taxable Gain or Loss Worksheet" there are two tests, one of them looks like: 2. Read the following tests carefully.
First test: You did not use any part of your home for business or rental after May 6, 1997.
Second test: You, your spouse, or your former spouse used your home as a main residence continuously from January 1, 2009 until the date of sale—or if that is not the case, and there was a period of non-residence use, one of these situations applies:
Any portion of the 5-year period ending on the date of sale or exchange after the last date you use the property as a main home (meaning you owned and lived in the house for at least 2 years from the 5-year period ending on the date of the sale).
You had a change in employment, a health condition, or other “unforeseen circumstance” described in Does Your Home Qualify—Details and Exceptions , earlier, and you moved out of your home for not more than 2 years in total.
You or your spouse qualifies for the “stop the clock” exception for certain military, intelligence, and Peace Corps personnel described in Service, Intelligence, and Peace Corps Personnel , earlier. I'm wondering about the 1st part of the second test. I don't understand it.
JA: Is there anything else the accountant should be aware of?
Customer: I'm selling a house, I've currently lived in it for 2 yrs out of the last 5, but if it doesn't sell by the end of december I won't have lived in it for 2 of last 5.
Submitted: 8 months ago.
Category: Finance
Expert:  Lane replied 8 months ago.

Hi. My name’s Lane. … I can help here.


I have a law degree, (Juris Doctorate), with electives in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986.


Yes, all other things being equal, (meaning that if you don't have one of the exceptions, such as having to move for unforeseen circumstances, etc.), then you will not get the primary residence exclusion without moving back in until you sell.


The period of time doesn't have to be continuous... it can be any 24 months, or even any 730 days.


And again, there can be a partial exclusion if...

  • the home was sold because of a change in your health, place of employment, or some other unforeseen circumstance. The reduced exclusion calculation is generally based on the lesser of the days used or owned, divided by 730 days.
Expert:  Lane replied 8 months ago.

Please Let me know if you have ANY questions, before rating me.