If you are a member of the
Uniformed Services or the Foreign Service, or an employee of the intelligence
community in the Unites States, you may choose to suspend the 5-year test period for
ownership and use if you are on qualified official extended duty. This means you may be able to meet the 2-year
residence test even if, because of your service, you didn’t actually live in
your home for at least the 2 years during the 5-year period ending on the date
of sale.
Example.
John bought and moved into a home in 2007. He lived in it as his
main home for 2½ years. For the next 6 years, he didn’t live in it because he
was on qualified official extended duty with the Army. He then sold the home at
a gain in 2015. To meet the use test, John chooses to suspend the 5-year test
period for the 6 years he was on qualified official extended duty. This means
he can disregard those 6 years. Therefore, John's 5-year test period consists
of the 5 years before he went on qualified official extended duty. He meets the
ownership and use tests because he owned and lived in the home for 2½ years
during this test period.
Qualified extended duty. You
are on qualified extended duty if:
- You are called or ordered to active duty for an
indefinite period, or for a definite period of more than 90 days.
- You are serving at a duty station at least 50 miles
from your main home, or you are living in government quarters under
government orders.
- You are one of the following:
- A member of the armed forces
(Army, Navy, Air Force, Marine Corps, Coast Guard);
- A member of the commissioned corps of National Oceanic
and Atmospheric Administration (NOAA) or the Public Health Service;
- A Foreign Service chief of mission,
ambassador-at-large, or officer;
- A member of the Senior Foreign Service or the Foreign
Service personnel; or
-
An employee, enrolled volunteer, or enrolled volunteer
leader of the Peace Corps serving outside the United States.
Period of suspension. The period of suspension
can’t last more than 10 years. Together, the 10-year suspension period
and the 5-year test period can be as long as, but no more than, 15 years.
You can’t suspend the 5-year period for more than one property at a time.
You can revoke your choice to suspend the 5-year period at any
time.
(See the attached screenshot below. Click to enlarge.)
