You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serves on qualified official extended duty as a member of the Armed Forces. This means that you may be able to meet the 2-year use test even if, because of your service, you didn't actually live in your home for the required 2 years during the 5-year period ending on the date of sale.
Normally, to exclude gain you must have lived in the home two of the last five years before the sale. In your case, you can exclude any time you were on active duty stationed elsewhere. You will have to compute this yourself- I suggest get a calendar that starts with the sale date and work backwards. Count any days that you were not on active duty until you reach 1825 (that is your stopping point) then go back forward and count the days you lived in the home as your residence using the days you were NOT active duty. If it is less than 730 (two years) use the percentage to calculate your partial exclusion amount. Keep these with your tax records in case you are audited.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
