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Level 3
posted Feb 15, 2021 6:30:16 PM

Does turbo tax have job change "safe harbor" tests for sale of home if I owned it less than two years?

 

I read the following from https://hackyourwealth.com/home-sale-capital-gains-tax-exclusion

“Just as with job changes and health conditions, “other unforeseen circumstances” also has a “safe harbor” test. The safe harbor kicks in if ANY of the following happens while you own and live in your home:

Involuntary conversion

Natural or man-made disaster, war, or terrorism causing damage or destruction to your home

Death of you or a family member

Job loss making you or a family member eligible for unemployment benefits"

 

After we purchased our house in Nov 2019 my wife lost her job and is currently on unemployment, can I sell my house and receive part of the gains exclusion (15/24 if sold in March 2021) for next year even if I continue working in the same city at my same job? 

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1 Best answer
Expert Alumni
Feb 15, 2021 7:59:45 PM

Yes. You will be able to exclude part or all of the gain. Receiving unemployment is one of the “safe harbor” tests:

  • Change of health
  • Death, divorce, or legal separation
  • Multiple births (twins, triplets, etc.)
  • Change in place (more than 50 miles) of employment
  • Receiving unemployment benefits
  • Change in employment leaving you unable to pay mortgage of basic living expenses
  • Other

Refer to Unforeseen Events in IRS Publication 523 (2019), Selling Your Home.​​​​​​​

 

2 Replies
Expert Alumni
Feb 15, 2021 7:59:45 PM

Yes. You will be able to exclude part or all of the gain. Receiving unemployment is one of the “safe harbor” tests:

  • Change of health
  • Death, divorce, or legal separation
  • Multiple births (twins, triplets, etc.)
  • Change in place (more than 50 miles) of employment
  • Receiving unemployment benefits
  • Change in employment leaving you unable to pay mortgage of basic living expenses
  • Other

Refer to Unforeseen Events in IRS Publication 523 (2019), Selling Your Home.​​​​​​​

 

Level 3
Feb 15, 2021 8:07:13 PM

Thanks for the quick answer with the reference to the IRS publication, this is exactly what I was looking for! After looking over the IRS publication, it looks like my wife would qualify for the partial exclusion on the $250K where my $250K is not eligible.