You can take the exclusion if you meet the requirements. When you enter the sale, you will be asked if the exclusions apply. You will also be asked if you excluded any of the gain on the previous sale which you can answer NO to. If you did not meet the requirement of living in the home for 2 years, see the possible exclusion reasons below. You will be asked about these also. If you qualify, mark the appropriate box and the gain will be excluded. TurboTax will walk you through all of this when you enter the sale.
To qualify for a full exclusion, you generally must own your home for at least two years during the five-year period prior to the date of sale. There are a few exceptions, however.
1. If you had postponed gain on the home you sold under the old "rollover" rules, enter here the purchase date of the earlier home which you "rolled into" this home. If you had rolled over more than one, enter the date of the earliest purchase in the series. Once you have a date more than two years prior to your current sale, though, there will be no tax consequence of entering an earlier date.
2. If your spouse died and had owned the property longer than you, enter here the date your spouse purchased the property if your spouse also lived in it as his or her main home during that period.
3. If your spouse transferred the property to you (or if your former spouse transferred the property to you incident to divorce), enter the date your spouse (or former spouse) purchased the property.
4. If a prior home was destroyed or condemned and the basis of the home you sold depended on the basis of that prior home, enter the date you purchased the prior home.
5. You sold the home due to unforeseen circumstances. These can apply to you, your spouse, or anyone else living in the home. Unforeseen circumstances include:
- Change of health
- Death, divorce, or legal separation
- Multiple births (twins, triplets, etc.)
- Change in place (more than 50 miles) of employment
- Receiving unemployment benefits
- Change in employment leaving you unable to pay mortgage or basic living expenses
- Military or foreign service
- Natural or man-made disaster
- Act of war or terrorism
- Condemnation, seizure, or other involuntary conversion
- Other unforeseen circumstances
Active-duty military and foreign service members may be able to look back over a period of time greater than five years.
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