The IT-AFF2 is a simple affidavit. Nothing to do with taxes. In your closing package you will have an ALTA settlement statement. That statement has what you need on it, for reporting the sale on your tax return.
It is my understanding that we would be exempt from witholding.
That may (or may not) be true for federal taxes. But if the state taxes personal income, that may not be the case for state taxes.
Which form should be used when closing as it only references the civilian 2 of the last 5 years.
First, understand how the law reads. WHile I'm not going to look it up word for word, I'll try to explain.
For AD/MIL, the ownership period is "suspended" for a maximum of 10 years. It's not "extended".
The requirement is that the property was your primary residence for 730 days of the last 1826 days you owned it.
So if you purchased the house on Jan 1, 2010 as your primary residence and then moved due to PCS orders on Dec 31 2013, that means you lived in the house for 3 years, and owned it for 3 years. So you qualify for the exemption. The ownership day count was not extended. The day count "STOPPED" on Dec 31 2013.
If you were PCS'd back to the same general area on Jan 1, 2021, then the day count "resumed" on that date. So long as you close on the sale of the house before Dec 31, 2023, you will have lived in the property for 730 days of the last 1826 "COUNTED" days that you owned the property.
