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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15731
Experience:  15years with H & R Block. Divisional leader, Instructor
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I have a question regarding my tax situation. I've just sold

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I have a question regarding my tax situation. I've just sold a home and I would like to know if I can claim it as primary residence.Thank you

Hello, I'm Robin. Welcome to JustAnswer. I'm reviewing your question now and typing up my reply. I'll post that in just a few moments.

Under Section 121 of the tax law, your main home is the home you owned and lived in (more nights in a year if you have more than one home) for at least 2 years out of the 5 years prior to the sale.

Have you owned and lived in this property for at least 2 years out of the 5 years before you sold it?

Customer: replied 27 days ago.
Let me explain my situation. I've asked different CPAs and they gave me different answers.


Please tell me the specifics. Perhaps you are allowed a portion of the exclusion.

Customer: replied 27 days ago.
I lived there for 14 months. After that I moved out of town because of job relocation. I rented out for the last 1.5 years before the sale. Am I qualified for partial exclusion?

Yes. You would be allowed a portion of the exclusion on the gain. This is covered under IRC 121

When you sale a rental property though you have a recapture of depreciation. The exclusion cannot be allowed against that just the tax on the gain.

Robin D. and 3 other Tax Specialists are ready to help you
Customer: replied 27 days ago.
Can you be more specific?
Customer: replied 27 days ago.
Can I claim it as primary residence?

You have to calculate your gain based on the original cost less the depreciation claimed plus improvements and teh sale price less costs to sale.

You do claim as primary but you still have to show as a slae for the rental portion

You prorate the exclusion based on how much time you did live there in the 5 years. If you do have a gain from the sale you have to look to paying tax on the depreciation you claimed while it was rental. That part cannot be lessened by the exclusion.

Customer: replied 27 days ago.
I've just talked to Barbara. I have a following question.

Sure go ahead

Customer: replied 27 days ago.
I lived in my home for 14 months and rented out for 18 months. How much of the capital gain can be excluded for tax purposes?
Customer: replied 27 days ago.
My capital gain is 250k
Customer: replied 27 days ago.
also the house was vacant for 2months after the tenant moved out.

The reduced maximum exclusion is computed by multiplying the maximum dollar limitation ($250,000 or $500,000) by a fraction.

The numerator of the fraction is the shortest of the following periods of time:

(1) the taxpayer’s ownership of the property during the five-year period ending on the date of the sale or exchange,

(2) the taxpayer’s use of the property as the taxpayer’s principal residence during the five-year period ending on the date of the sale or exchange, or

(3) the length of time between the date of a prior sale or exchange of property for which the taxpayer excluded gain under section 121 and the date of the current sale or exchange.

The denominator of the fraction is 730 days or 24 months (depending on whether the numerator is measured in days or months).

Customer: replied 27 days ago.
I'm married. So the maximum is 500k

You could exclude almost $292,000

Customer: replied 27 days ago.
Barbara mentioned about Turbotax tricky questions. This is the one that I need to get it right.Did You Use This Home for Anything Other Than Your Primary Home? ("nonqualified use")My answer is No since I rented it out after I used it as primary residence. I looked at the example that they provide and I believe my situation fit their explanation:However, "nonqualified use" does not apply to time that falls into one of the following categories:
2. Temporary absences due to a change in employment, health or unforeseen circumstances.Their example also shows that 1 year renting is still not considered "nonqualified use".Is that correct?