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I am looking to sell my home and anticipate a gain of $100k.

I am married and am...
I am looking to sell my home and anticipate a gain of $100k. I am married and am wondering if I qualify for the exclusion as I am moving due to job circumstances. We have lived in our home for 18 months - Do I need to have a job before we move (500mi) or can I find one close to the date that we sell our home?
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8/30/2013
Arthur Rubin
Arthur Rubin, Tax Preparer
Category: Tax
Satisfied Customers: 1,561
Experience: 22 years of tax preparation experience, including individual, trust, and estate returns.
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Arthur Rubin :

Thank you for using Just Answer.

Arthur Rubin :

There are IRS regulations describing the situations under which a (partial) exclusion may be obtained. Give me a moment to find them.

Arthur Rubin :

You probably not qualify for the "safe harbor" (26 CFR 1.121.3(c)(2) ), as that requires the "change of employment" occur while you own and live in the property. In other words, you would need the new employment before you move.

Customer: And that is the only exemption for job change?
Arthur Rubin :

Well, no. Under (c)(1), there is an exemption if "the primary reason for the sale or exchange is a change in the location of the individual's employment." That is hard to justify if the change of employment occurs after the sale, though.

Customer:

Yes... I was reading:


A safe harbor does not apply, but you can establish, based on facts and circumstances, that the primary reason for the sale is a change in place of employment, health, or unforeseen circumstances.
Factors that may be relevant in determining your primary reason for sale include whether:




  1. Your sale and the circumstances causing it were close in time



Customer:

so I thought perhaps if the events were close that I may still qualify

Customer:

Also - my husband was diagnosed with lymphoma a couple years (he is now in remission) ago and has undergone 2 spinal fusions.... so we need to be closer to family for assistance. Not sure if that would help us qualify under the health exemption - but it is a factor that is leading us to sell our home.

Arthur Rubin :

You have a point. I don't know if I would push it unless you had unexpected employment or underemployment at your current location. See regulations 1.121-3(e)(2)(iii)(B) or (C). That's a different safe harbor under the regulations.

Arthur Rubin :

Actually, that is close to an example in the "health exemption". Give me a moment to check. (Sorry, I didn't read your last paragraph before replying.)

Customer:

That's ok - thank you!

Arthur Rubin :

Examples 1 and 2 under "health" seems close....

Arthur Rubin :

Example 1: In 2003 A buys a house that she uses as her principal residence. A is injured in an accident and is unable to care for herself. A sells her house in 2004 and moves in with her daughter so that the daughter can provide the care that A requires as a result of her injury. Because, under the facts and circumstances, the primary reason for the sale of A's house is A's health, A is entitled to claim a reduced maximum exclusion under section 121(c)(2).

Customer:

Okay! That's very close - we would actually be moving in with my mother in law

Customer:

my husbands mother - so i think we have an argument there

Customer:

hes on disability and i am working

Arthur Rubin :

Example 2 relates to the taxpayer moving in to a relative's house to take care of that relative; but, I think we have a match, here.

Customer:

Excellent - That helps us... And hopefully I have a job before I move so it will be a slam dunk :)

Arthur Rubin :

Yes, it looks good. The examples all presume that the health problem occurs after the purchase of the house, but a change in health requiring the change in residence should be adequate.

Customer:

ok, thank you!

Arthur Rubin
Arthur Rubin, Tax Preparer
Category: Tax
Satisfied Customers: 1,561
Experience: 22 years of tax preparation experience, including individual, trust, and estate returns.
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