Capital gains on a property we lived in for 20 months
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Capital gains on a property we lived in for 20 months

 
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Capital gains on a property we lived in for 20 months

You may not have to pay capital gains tax on the sale of your home. Although you did not live in the home for a full 2 years, you may qualify for a reduced home sale exclusion if the circumstances of the home sale meet certain safe harbor guidelines.

The reduced exclusion percentage is calculated by dividing the number of days that you lived in the home divided by the number of days in two years. That percentage is multiplied by the full exclusion amount of 250,000 dollars (or 500,000 dollars for married joint filers). For a home lived in for 20 months, the reduced exclusion would be around 208,000 dollars (20/24 = 83.3%, 250,000 dollars X 83.3% = 208,333.33)

The listed unforeseen events are as follows:

Work-related move.   You meet the standard requirements if any of the following happened during the time you owned and lived in the home you sold:

  • You took or were transferred to a new job in a work location at least 50 miles farther from home than your old work location.

  • You had no previous work location and you began a new job at least 50 miles from home.

  • Either of the above is true of your spouse, a co-owner of the home, or anyone else for whom the home was his or her residence.

Health-related move.   You meet the standard requirements if any of the following happened during the time you owned and lived in the home you sold.

  • You moved to obtain, provide, or facilitate diagnosis, cure, mitigation, or treatment of disease, illness, or injury for yourself or a family member.

  • You moved to obtain or provide medical or personal care for a family member suffering from a disease, illness, or injury.

  • Family includes:

    • Parent, grandparent, stepmother, stepfather;

    • Child, grandchild, stepchild, adopted child, eligible foster child;

    • Brother, sister, stepbrother, stepsister, half-brother, half-sister;

    • Mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law, daughter-in-law;

    • Uncle, aunt, nephew, niece, or cousin.

  • A doctor recommended a change in residence for you because you were experiencing a health problem.

  • The above is true of your spouse, a co-owner of the home, or anyone else for whom the home was his or her residence.

Unforeseeable events.   You meet the standard requirements if any of the following happened during the time you owned and lived in the home you sold.

  • Your home was destroyed or condemned.

  • Your home suffered a casualty loss because of a natural or man-made disaster or an act of terrorism. (It doesn’t matter whether the loss is deductible on your tax return.)

  • You, your spouse, a co-owner of the home, or anyone else for whom the home was his or her residence:

  1. Died;

  2. Became divorced or legally separated;

  3. Gave birth to two or more children from the same pregnancy;

  4. Became eligible for unemployment compensation;

  5. Became unable, because of a change in employment status, to pay basic living expenses for the household (including expenses for food, clothing, housing, medication, transportation, taxes, court-ordered payments, and expenses reasonably necessary for making an income).

  • An event is determined to be an unforeseeable event in IRS published guidance.

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