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ceads1598
New Member

Do I qualify for the military stop clock exclusion for the 2 of 5 year use test on sale of rental property even if I do not met the requirements for the look back test?

I sold primary residence in April 2016 due to military orders and took the capital gains exemption on 2016 tax return.  I want to sell a rental property that I bought in 2004 and lived in until 2009, then rented out until 2017.  All of my time away was under military orders.  I qualify for the stop clock military exception for the 2 in 5 years test.  However, I do not meet the look back test since I claimed a capital gains exemption on sale of home less than two years ago.  Can I still use the military stop clock exception to claim capital gains exemption on 2017 tax return?

1 Reply
TaxGuyBill
Level 9

Do I qualify for the military stop clock exclusion for the 2 of 5 year use test on sale of rental property even if I do not met the requirements for the look back test?

No.

To qualify for the exclusion, you need to meet two tests.  Due to the military, you meet the 2 out of 5 (modified) test, but you do not meet the test that you can only exclude one home every 2 years.  Sorry.

https://www.irs.gov/publications/p523#en_US_2016_publink10008935


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