My question is related to the partial exclusion of the capital gains for a home sale. I lost my job this year and accepted an offer in another state (at least 160 miles away from my current residence). I will be selling my home to relocate to my new job and have questions about how the IRS' Partial Exclusion of Gain would affect my home sale?
I purchased my home for $219 K in 2012. It's been my primary residence since then. My home is expected to sell for (at least) $500 k per the realtor. As the capital gains difference would be greater than $250 K, what would the IRS' Partial Exclusion of Gain be for capital gains when I sell my house because I have to move to another state?
you say you purchased in in 2012 and used it as your primary residence since then. if you were to move out today and wait to sell until 1/01/2022 (actually even later depending on the date you bought it in 2012) you would be entitled to the full $250,000 exclusion barring any change in the tax laws. the rules are you must own and occupy as your primary residence for 2 out of 5 years before sale. the 2 years do not have to be consecutive nor does it have to be your primary residence on the date you sell.
if you sold on 01/01/2022 the 5 year period would be 1/1/17 through 12/31/2021. from 1/1/17 to today 11/14/19 is more than 2 years so you meet the occupancy and ownership tests. the reason for sale is irrelevant since you qualify for the full exclusion.
@HACKITOFF - not following your response. the requester has already lived in the house for 2 of the last 5 years, since he states he bought the house in 2012 and it has been his primary residence since the purchase.....
why would he not be entitled to the entire $250,000 exclusion NOW?
@greener_007 Is your filing status Single or Married filing jointly? Your post seems to indicate that you are single since you referred to the $250,000 exclusion, but just checking. You have lived in the house long enough to qualify for the full exclusion for your filing status, so your question is not clear. Are you asking if you get a bigger exclusion than $250K from capital gains tax because you are moving?
SALE OF HOUSE
If your gain was more than $250,000 filing Single, or more than $500,000 filing Married Filing Jointly the sale must be reported on your tax return. Whether you re-invested the gain in to another house is irrelevant. If you have a Form 1099-S go to Federal>Wages and Income>Less Common Income>Sale of Home (gain or loss)
If you owned and lived in the home as your primary residence for at least 2 of the last 5 years on the date of the sale, you do not have to report the home sale if the gain is less than $250K filing Single, or less than $500K filing Married Filing Jointly (and you both owned and lived in the home for at least 2 years).
To help clarify - Yes, I've lived continuously in the house (my only residence) since it was purchased in 2012. Also, I should have specified in reference to the $250,000 limit that I'm a single filer and will continue to be one when I sell the house.
My question would be if there are any tax benefits (e.g., your mention of a bigger exclusion, or more than $250,000) if you were moving specifically for work, and you had lived in your home as a primary residence for more than two years. Below is the benefit described by the IRS for those who move before they hit the two year mark in home ownership:
You meet the requirements for a partial exclusion if any of the following events occurred during your time of ownership and residence in the home.
similar to those extended to homeowners who are moving for work related purposes if they have lived in their home for greater than two years, similar to the partial benefit the IRS extends to those who must move for work but have only lived in their home for less than two years.
My question would be if there are any tax benefits (e.g., your mention of a bigger exclusion, or more than $250,000) if you were moving specifically for work, and you had lived in your home as a primary residence for more than two years.
No. $250,000 is the maximum exclusion for those who meet the eligibility tests (which you do) and are filing single or married filing separately.
there is no additional benefit beyond the $250,000 exclusion (single) of you move because of your work / job. You have met that exclusion because yuou have lived in your home at least 2 of the last 5 years.
The benefit you are questioning is for people that unexpectedly cannot meet the requirement of living in their home for 2 of the last five years because their job takes them elsewhere. Say someone bought a home in 2018 and one year later had to move because of their job AND have a lot of appreciation. In that case, the IRS provides pro-rata benefit against the $250,000.
BTW, don't forget to reduce your profit by your closing costs / realtor fees.... the calculation of profit is not as simple as 'what I paid for my house" less "what I sold my house for"