Primary residence stay "2yrs

Question

I was doing turbo tax, and im surprised that it is changing my return based on the number of months i claim i used the residence as my primary residence.

I realize over two years is tax free, but im not trying to do this.

I had stayed there for 19 months, and it claims my income is totally tax deductible (which is weird). So out of curiosity i lowered the number down a couple of months (all the way down to 13 months), and it gave me a different number every time i changed the number. Is this a flaw in their software, are is there really a deductible based on time less than 24 months?

I also realize that over a year is long term capital gains, but that is not my question either.

Bob Norton · Answer

If you lived in your residence for less than two years and had to sell it due to an unforseeable event, then you get a partial exemption based on the period of time you lived in the home.

Natalie Kolodij · Answer

This is the downside to software vs. a tax pro

You have no idea why the software is doing what it is , or if it's correct

Eamonn McElroy · Answer

@Sean Holland

"When a CPA does your taxes, are they willing to sit down with you and explain all the intricacies they did, or do they charge you 100-300/hr on top of the filing fees to explain?"

Depends on the firm.  My firm's compliance engagements include a 30-60 minute phone call at the end, before filing, to discuss items related to the return and allow the client to ask any and all questions that are in-scope of the return filing.

"Also, what guarantee can they give you on an audit that tax software cannot?"

You're preparing the return if you use DIY software...a CPA is preparing the return if you use a professional.  It's implied that you're going to get a much higher quality work product going the latter route (generally speaking).  This is what we do year-round and a great deal of us are very good at it.  An analogous parallel to your question might be someone asking a doctor what guarantee they offer for a surgery vs having their neighbor do the surgery with Walgreens supplies and WebMD open in the browser.

Natalie Kolodij · Answer

If you think the literal only benefit is audit protection you're looking at it backwards. There are tax benefits aside from staying out of jail and losing audits. You can actually save money, especially in REI.

You would have been able to have a definite answer on the tax impact of your home sale ahead of time instead of changing numbers and software and being surprised by results.

Sean H. · Answer

When a CPA does your taxes, are they willing to sit down with you and explain all the intricacies they did, or do they charge you 100-300/hr on top of the filing fees to explain? Also, what guarantee can they give you on an audit that tax software cannot?Either way, i missed my deadline for a CPA. I'm enjoying learning all the details of tax law in the real estate sector.

Primary residence stay "2yrs<1yrs" changes return?

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