Thanks for your reply. I have been reading Pub. 523 in detail and I believe we do qualify for an exclusion due to "an unforseeable event that made that the home less suitable as a main home for a specific reason". I kind of got lost figuring it out from there though. Seems like it calculated our pro-rated amount of the exclusion and then it went into the rental income and I lost it from there.
I know it won't be 100% accurate for 2021, but I was thinking about going back into the 2020 software and pretending like we sold it and see what it tells us.? Not sure how or where we document the unforseeable event. I have reached out for some CPA referral suggestions, but haven't talked to one yet.
• The home became significantly less suitable as a main home for you and your family for a specific reason.
Other Facts and Circumstances Even if your situation doesn’t match any of the standard requirements described above, you still may qualify for an exception. You may qualify if you can demonstrate the primary reason for sale, based on facts and circumstances, is work related, health related, or unforeseeable. Important factors are: • The situation causing the sale arose during the time you owned and used your property as your residence. • You sold your home not long after the situation arose. • You couldn’t have reasonably anticipated the situation when you bought the home. • You began to experience significant financial difficulty maintaining the home. • The home became significantly less suitable as a main home for you and your family for a specific reason.
