Gain on sale of rental property

Forum|Forum|4 years ago
January 26, 2022
1 reply
11 views

I purchased a home that I lived in for a year before converting it to a rental for one year and then selling it with gains. I moved and converted it to a rental due to family issues with their lost jobs, divorce, covid etc. Are there any exclusions to the 2 year rule that apply in my situation to reduce the capital gains tax?

ColeenD3

Level 15

No. The provision for a partial exclusion is applicable if you sold due to the circumstances, not that you converted to a rental because of the circumstances.

This is from Pub 523:

Showing facts and circumstances.

If your circumstances don’t match any of the standard requirements described above but 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

mkali3453Author

Level 2

What if selling in a pandemic market was not feasible?

DianeW777

Level 15

There is nothing in the guidance about a pandemic situation for exclusion on the sale of your home. However, you can review the details by using the link below.

As reference by @ColeenD3 there are limited circumstances eligible for partial exclusion. You should review the IRS Publication 523 beginning on page 6, to see if you can provide the necessary details for your situation.

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