the exclusion whole or partial only applies to your principal residence.
you get to choose between whole months (ie must be occupied by you from the first day to the last day of the month) or days of occupancy. temporary absences like for vacation or medical treatment are considered as occupancy.
for a single taxpayer the $250,000 exclusion is prorated based on the ratio of the period of occupancy to either 24 months or 730 days depending on which option you choose. Only occupancy within 5 years of sale counts. if you owned and occupied it as your principal residence lived there for either of these periods (ie 24 full months or 730 days within the 5 years you're entitled to the full exclusion and don't need a reason.
the IRS REG 1.121-3(b) states that if the taxpayer's home sale does not qualify under the safe harbor rules, the taxpayer can still satisfy the unforeseen circumstance reason for the sale based on particular facts and circumstances. Factors that may be relevant in determining the taxpayer's primary reason for the sale or exchange include (but are not limited to) the extent to which—
(1) The sale or exchange and the circumstances giving rise to the sale or exchange are proximate in time;
(2) The suitability of the property as the taxpayer's principal residence materially changes;
(3) The taxpayer's financial ability to maintain the property is materially impaired;
(4) The taxpayer uses the property as the taxpayer's residence during the period of the taxpayer's ownership of the property;
(5) The circumstances giving rise to the sale or exchange are not reasonably foreseeable when the taxpayer begins using the property as the taxpayer's principal residence; and
(6) The circumstances giving rise to the sale or exchange occur during the period of the taxpayer's ownership and use of the property as the taxpayer's principal residence.
so keep copies of police report and any pictures taken showing the vandalism even if the perps are not in the pictures.
