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I bought my house in 2002 and lived there til July 2008, when

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my wife and my kids...
I bought my house in 2002 and lived there til July 2008, when my wife and my kids moved to another home because we wanted to be close to a school that could handle the health condition of our daughter. We tried to sell our house for about 6 months, but couldn't, so rented it instead. Given the above, does that mean that we have until July 2011 to get and use the $500K exclusion? After that, we'd lose it? http://www.realestate-calc.com/Tax_Exclusion.html Or, does the economy or our daughter's health and give us any sort of extension?
Submitted: 6 years ago.Category: Tax
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Answered in 10 hours by:
4/1/2011
Tax Professional: jgordosea, Enrolled Agent replied 6 years ago
jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3,161
Experience: I've prepared all types of taxes since 1987.
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Greetings,

 

Indeed, you are correct that you will have to close on the sale on in 2011 or before the day you left in July of 2008.

 

Although there are reasons that an exclusion can be used when there is less than the two years (or 730 days) of ownership and occupancy; there are no similar provisions for extending the period after ending occupancy (except for military members).

 

You are also correct that once you do not have two years of occupancy within the five years prior to the sale date that there is no (zero) exclusion allowed.

 

Of course, if you again occupy the house that might qualify for later exclusion; but once you are out for three years you would have to be back in for two years for a full exclusion.

 

I hope this helps to confirm that there will be no exclusion for you after July 2011 even though that is likely not the answer you would have liked to hear.

 

Best wishes.

 

 

jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3,161
Experience: I've prepared all types of taxes since 1987.
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