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 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.

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