topic My wife and I are military and were forced to move after 13 months of home ownership. We won't be going back to that house. Do we qualify for an exclusion on our profits? in Deductions & credits

My wife and I are military and were forced to move after 13 months of home ownership. We won't be going back to that house. Do we qualify for an exclusion on our profits?

will-snyderr — Sat, 10 Aug 2019 06:34:13 GMT

I started a new job in the military and it forced us to move farther than 50 miles away. We will not be able to move back to the location where our home is, and we are wondering if we qualify for the exclusion on our sale profits.

Re: My wife and I are military and were forced to move after 13 months of home ownership. We won't be going back to that house. Do we qualify for an exclusion on our profits?

Critter — Sat, 10 Aug 2019 11:45:19 GMT

From Pub 3 ... the third book all military should keep handy ...

What happens if I don't meet the ownership and use tests? If you don't meet the ownership and use tests due
to a move to a new permanent duty station, you can exclude gain, but the maximum amount of gain you can exclude will be reduced. See Pub. 523 for more details. https://www.irs.gov/pub/irs-prior/p3--2018.pdf

From pub 523 :

Work-Related Move
You meet the requirements for a partial exclusion if any of
the following events occurred during your time of ownership and residence in the home.
• You took or were transferred to a new job in a work location at least 50 miles farther from the home than
your old work location. For example, your old work location was 15 miles from the home and your new work
location is 65 miles from the home .... for the Military a change of station qualifies for this exception.

https://www.irs.gov/pub/irs-pdf/p523.pdf

Re: My wife and I are military and were forced to move after 13 months of home ownership. We won't be going back to that house. Do we qualify for an exclusion on our profits?

Carl — Sat, 10 Aug 2019 14:30:49 GMT

Basically, you will qualify for a partial exclusion of the taxable gain. If the house was your primary residence for 13 of the 24 months required, you'll be able to exclude 13/24 of your gain from taxes. Exactly how the program handles this, depends on where you are reporting the sale in the program. I would expect "Sale of Home (Gain or Loss" under the personal income tab. So when the program asks questions pertaining to the "lived in 2 of last 5" rule, you will indicate that you did live in it for the required time. Then the program will ask how many months each of you lived in it and will figure the percentage of your gain that is excluded based on your input.

Do note that if the program says you don't qualify at all, then it's because you did not indicate to the program that you are active duty military under the Personal Info tab.

Re: My wife and I are military and were forced to move after 13 months of home ownership. We won't be going back to that house. Do we qualify for an exclusion on our profits?

Hal_Al — Sat, 10 Aug 2019 22:52:55 GMT

"you'll be able to exclude 13/24 of your gain from taxes"

That's not how it works. The MAXIMUM ($500,000 for married filing jointly) exclusion is reduced . So, if you lived there 13 months, your maximum exclusion is 13/24 x 500,000 = $270,833. So, as long as your gain is less than $270,833, you will be allowed to exclude the entire amount.