Capital gains exclusion for two year homestead exceptions

3 Replies

I have thoroughly investigated the IRS website and still have a few questions I was wondering if someone could help me out with.

It appears that I qualify for some exceptions but after researching it's still unclear.

There are two exceptions I believe I qualify for.

1) I was married in March. According to the irs, marriage is an exception.

Is it that cut and dry?
Is it a full exception?

2). My wife has been requested to transfer.

According to the IRS a move because of a job is an exception but is only a partial exception.

Any clarification on this ?
How is the partial exception calculated.

I have on my primary residence for 14 months.

I'm poised to profit about $75,000.

My wife and I would like to move and have her take that job, but we would owe the irs approximately $20,000 if we didn't qualify for any exceptions.

Thanks for any input.

Brit.

@Brit Foshee Do you and your wife own the house or is it in one party's name? How long have you owned the house and used it as a primary residence?

@Brandon Hall

Thanks for the reply.

I bought it in my name 14 months ago and it's been my primary since. My wife and I were married in March.

@Brit Foshee so generally, if you are allowed to take a partial exclusion, you pro-rate it based on months or days you were in the home. You divide by 2 years to get your percentage of the total exclusion:

# Months Primary Residence / 24 = Percentage applied to exclusion

# Days Primary Residence / 730 = Percentage applied to exclusion

I'd recommend touching base with a tax professional just to be sure you are able to take the exclusion and how to calculate it correctly per your situation.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here