I own a townhouse in Virginia since 2001 and rented from 2008 to now. We return to US in 2025 and plan to sell for medical reasons. How to calculate Cap Gains exclusion?

[ribatelfath]

We want to determine our partial exclusion (out of 500,000 max for joint filing) using medical reason (my wife can no longer handle stairs). How do we determine if and by how to calculate the partial exclusion.

[Mike9241]

if it wasn't used as your principal residence at any time in the 5 years before sale the exclusion is zero

otherwise

1) number of days (or months) used as your principal residence in the 5 years before sale. do not use more than 730 days or 24 months

2) divide the number on line 1 by 730 if you used days or 24 if you used months (can't be more than 1 round to at 3 decimal places)

3) multiply the ratio on 2 by $500,000. this is the exclusion

also note that depreciation recapture applies before any exclusion

[NCperson]

@ribatelfath to be eligible for the exclusion, you are required to own AND reside in the residence for 2 of the prior five years counting back from the date of sale.  While you would meet the ownership requirement, you would not meet the residency requirement, and therefore, th3ere is no exclusion eligibility.

The medical exceptions generally come into play if you owned and resided in the home for less than two years, which is not the case here.