@glee308995 wrote:
This is the saddest answer I came across on the internet today ðŸ˜
I left NJ/US in 2018 and rented out my house, it was meant to be just 2 years. Then came the pandemic and I ended up overseas until now because of the kid in school. I was trying to see how I can move back to NJ for 2 years and re-qualify for the 2 out of 5 rule and came across this.
If you were overseas due to being in the military, US foreign service, or peace corps, you can get up to a 10 year extension on the 5 year rule and you could qualify for a full exclusion if you sell the home without moving back into it. (But, you still have to pay recapture on the depreciation you took or could have taken while it was a rental.) The details are here on pages 4-6.
https://www.irs.gov/pub/irs-pdf/p523.pdf
If not overseas due to government service, if you move back into the home for 2 years, you at least qualify for a partial exclusion.
