topic Partial Exclusion of Capital Gain - Sale of Home in Investors & landlords

Partial Exclusion of Capital Gain - Sale of Home

baw623 — Wed, 17 Mar 2021 11:41:07 GMT

I am trying to understand the tax implications of my home sale and whether I qualify to exclude a portion of that gain. Below is the timeline:

5/30/15: purchased home for $212,000 and used as primary residence

4/15/17: moved due to work re-location (specifically, military change of station)

5/1/17: began renting house to tenants

4/9/20: tenants lease ended

4/11/20: sold home for $269,900

Note that while I moved for a “valid” reason (change of employment >50 miles away), I did not technically sell the house at that point, it was sold a few years later. Had I not ever been forced to move though, I would have planned to stay in that house.

Re: Partial Exclusion of Capital Gain - Sale of Home

baw623 — Wed, 17 Mar 2021 16:53:22 GMT

@Carl I’ve seen your helpful responses on similar questions. Hoping you can provide some insight on this.

Re: Partial Exclusion of Capital Gain - Sale of Home

AmeliesUncle — Wed, 17 Mar 2021 18:59:40 GMT

Yes, due to the "work related move" you qualify to use the Reduced Maximum Exclusion.

You will pay tax on the gain based on the depreciation that you were able to take, but your profit of $57,900 will be tax-free.

Re: Partial Exclusion of Capital Gain - Sale of Home

Carl — Wed, 17 Mar 2021 21:55:36 GMT

On a qualified move, 1/24th of your gain will be excluded from tax, for each month you lived in the house. The 5-year"look back" starts from the closing date of the sale. So if you sold the property on 1/7/2020, that would mean 1/24th of your gain would be tax exempt for each month you lived in the house after 1/7/2015.