topic Home Sale Capital Gains Exemption in Deductions & credits

Home Sale Capital Gains Exemption

silverbullet64 — Fri, 27 Mar 2020 20:35:44 GMT

We sold a house last February that we didn't live in but 1 out of the last 5 years. TurboTax is saying it's exempt from paying income tax on it. How will this affect the 2020 taxes on the primary house we HAVE lived in 2+ out of the last 5 years that we sold a month ago?

Re: Home Sale Capital Gains Exemption

KarenM90 — Fri, 27 Mar 2020 20:58:02 GMT

If you did not live in the house you sold in 2019 for at least two of the last five years, then the sale would not be exempt. If that sale is not exempt, it will not affect the sale of your qualifying home in 2020. Please see the articles below for more details.

Please review your answers to those questions in TurboTax.

Here is an article that reviews the qualifications: Home Sale Exclusion

More information on Home Sale from IRS: IRS Topic 701 Sale of Your Home

Re: Home Sale Capital Gains Exemption

NCperson — Fri, 27 Mar 2020 21:19:46 GMT

well that is a problem.

first, that home you sold last year is not exempt; suggest going back and review how you answered the questions. something isn't correct.

then, the home you are selling in 2020 should qualify.

you can only have 1 residence qualify in a two year period.

suggest reading IRS publication 523

Re: Home Sale Capital Gains Exemption

AmeliesUncle — Sat, 28 Mar 2020 00:23:28 GMT

It is quite possible that you were exempt because you qualified for one of the exceptions to the 2 year rule (the most common is a job change that is at least 50 miles further away).

As for your question, you can only claim ONE exclusion every 2 years. So assuming you qualify for the exclusion for both home, you will want to choose the one that will save you the most tax.