Schedule e and selling two homes both of which you lived in

[essmith94]

Ok, so I am bit confused on this.  So I sold two homes last year, at the time of sale, one was a rental and one was my primary residence.  I had previously lived in  and owned the one that became the rental for 10 years and at the time of sale it had only been rented for 23 months.  The proceeds from both home sales went into my new home in a different state.  My question is can I claim the proceeds from both homes as proceeds under the primary residence exemption.  The total gains were less than $100K combined.  Anybody know the answer to this one?

Update: I was also on active duty for the sale of both homes which happened prior to retirement where I moved back to my home of record and used the proceeds to buy a new home.  Not sure if that changes anything.

[californiasteven]

I've linked one of the IRS info pages below.  It says that you can only exclude one home every two years.  I don't see how it would be possible to exclude two at once.  Both houses  seem to qualify since you owned  and lived in each for two of the previous five years before selling them. I guess you would have to choose which one is more beneficial to claim.   Unless there is something I misunderstood or some issue that I don't know about.

https://www.irs.gov/taxtopics/tc701.html

[essmith94]

Thanks, I have walked through this twice in turbotax and each time it is guiding me down the path that states that since I had lived in both for two of the last 5 years that I did not owe capital gains on either.  It even asked how many months were between the sale of the first and the sale of the second home (answer was 4 months).  It also asked why I had to sell the second home and when I stated work greater than 50 miles away it stated that I qualified for the exemption.  Not unusual for Turbotax to have a glitch but I just wondered if anyone has experienced this unusual situation.

[californiasteven]

I am not a TurboTax employee so I don't know how you would report this kind of problem.  I agree that it is a serious "glitch."  I think you should pick the house you want to exclude and change your answer on the other one to you did not live in it.  I just noticed your other comment.  I have never heard of military service being a factor in this, but maybe so. Here is "Pub 3"  Tax info for military people;  <a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/p3.pdf">https://www.irs.gov/pub/irs-pdf/p3.pdf</a>  I am reading the section too.  Will be right back.  That was probably a false alarm.  There are some special considerations for service people (thank you for yours) but I don't see anything that comes close to letting you exclude two houses in the same year.

[californiasteven]

I have the feeling that maybe I am wrong, there is something I don't know, and TurboTax is right.  I'd see what you can do about getting a second opinion.  Maybe repost your original question.

[essmith94]

Thank you for looking into it.  Actually I am going try and start fresh with the program.  I put the draft return in front of my financial advisor and he stated that it wasn't calculating the realized loss on the rental property so I should need to record capital gains on both.  I will let you know if that worked!