Q. If you move prior to owning a home for 2 years but you are moving with your company out of state, do you still have to pay tax on capital gains?
A. Simple answer: No. There is an exception for a work related move.
But the maximum amount that is not taxable is reduced for the reduced time in the home. For somebody meeting the 2 year rule, the maximum capital gain that can be excluded is $250,000 ($500,000 Married filing jointly). Using an example; a person who only owned and lived in the home 16 months could only exclude up to $166,667 (16/24 x $250K).
