Home Sale Job Change Window

[higginsconor1221]

My wife and I bought a home in Aug 2020 in the Upstate NY area. In May 2021 I changed jobs to a job in NJ (178 miles away from current residence). With the distance I am currently doing a hybrid situation where I come in twice a week and work from home three days. Our plan is to move to NJ over the next year.

Let's say we sell the house in June 2022. At that point we have not met the 2 years of primary residence in order to exclude any potential gains on sale (up to $500K). I read that you can get half of the exclusion ($250K) if the sale is due to a job change greater than 50 miles from the residence (applicable in this case). Is there a window of when you have to sell the house by? Using the June 2022 example it will have been over a year from the job change, but the primary reason for the move is the job change.

Understanding the tax implications of this unique situation will allow us to have a flexible timetable rather than trying to time the sale perfectly after 2 years. Any insight would be appreciated! 

For additional reference, we do not expect to have a gain greater than $50K on the sale.

[Mike9241 · Accepted solution]

the safe harbor rule is that a change in place of employment is considered to be the primary reason the taxpayer sold the home if;

1) the change in place of employment occurred during the period the taxpayer owned and used the home as their main home.

2) the new place of employment is at least 50 miles farther from the former residence than the former place of employment.

since at least one of you owned the home but both occupied it as your main residence your exclusion would be $500,000 prorated by the number of days used as the main home to 730 days. so with only a $50K gain all of it should be excludable

[higginsconor1221]

Thank you, Mike. And just to confirm, there's no rule about time between job change (May 2021) and sale date (June 2022)?

This is very helpful!

[Hal_Al]

Correct, there's no rule about time between job change (May 2021) and sale date (June 2022).

Q .I read that you can get half of the exclusion ($250K) if the sale is due to a job change greater than 50 miles from the residence. Is this true?

A. Yes, but not exactly.  The maximum amount of the exclusion allowed is reduced based on the actual amount of time owned and lived in. In your example, bought Aug 2020 & sold June 2022; the maximum exclusion would be 22/24 x 500K = $458,000.  You may exclude the  entire amount of your gain, but not more than $458,000.  So, you could move now (11 months  from purchase) and still exclude up to 11/24 x 500K = $229,000.