You don’t qualify for a partial exclusion on the second sale, because the reason does not fall under the category of an unforeseen financial circumstance or hardship as described in the regulations and publication 523 beginning on page 6. Even if you did qualify for a partial exclusion, the exclusion would have been based on the time since you last used your exclusion, In other words, the four months between the sale of the mountain home and the Hemlock home. That’s 4/24th, or 16% of $500,000, equals $83,000 of excludable gain. That’s the maximum exclusion on the sale of the second home, but only if you meet one of the special hardship rules, which it does not sound like you do.
