Turbotax is excluding all my capital gains on a home sale even though I lived in the home less than 2 years, is this a legitimate exclusion or a bug?

[normal-TX-guy]

Here are the clear parts of the situation.  We bought the main home on 2/27/2017 and sold it 9/23/2018 (less than 2 years).   Capital gains of $38K. TurboTax then deducted the appropriate amount of taxes from projected refund.

This is where my eyebrows get raised.  It then asked if I sold a previous home after 9/23/2016 (2 years before selling the main home).   I answered yes.  Sold the previous home in 11/2016.  Gains were <$1,000 total and we had that previous home for over five years, so TurboTax 2016 said it was excluded.

After asking how many months between a couple dates, I selected I sold both homes for work (employment location changed greater than 50 miles), all of my refund returned and no tax on the most recent capital gains.

Does that seem right?   Most everything I read online says I should be taxed something for selling the home within 2 years.

[DDollar · Accepted solution]

It sounds like you qualify for, and the program calculated a "Partial Exclusion".  According to the IRS:

If you don't meet the Eligibility Test, you may still qualify for a partial exclusion of gain. You can meet the requirements for a partial exclusion if the main reason for your home sale was a change in workplace location, a health issue, or an unforeseeable event.

Work-Related Move

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.

• You took or were transferred to a new job in a work location at least 50 miles farther from the home than your old work location. For example, your old work location was 15 miles from the home and your new work location is 65 miles from the home.

[normal-TX-guy]

Thank you for the timely and thorough response.

[DDollar]

You're welcome. Thanks for using TurboTax!

[dreaelise14]

Now I am having the opposite problem.  My husband and I sold our home in June 2019 (owned for 15 years, 1st home, no other sales, lived there the entire time)...  I have been scratching my head over this one as no matter how many times I go through it it tells me that we do not qualify for the exclusion and owe taxes on gains.  Why?

[DaveF1006]

Usually Turbo Tax will indicate why you do not qualify for a certain exclusion.  You may need to back through your questions thoroughly and look at your answers. Also you might contact Turbo Tax Customer Service so that you can screenshare with an agent to review your entries to see what the issue is.

[Doug93]

I'm having the same problem with Turbo Tax not calculating the exemption. Did you ever figure out what was wrong?

Thanks

[xmasbaby0]

@Doug93 You posted to a thread that has had no activity since January 2020, so you are unlikely to receive a reply from users who posted here a few years ago.  

Do you have an issue with the sale of a house?

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).

• If you are using online TT, you need Premier or Self-Employed software to report the 1099-S

[Doug93]

Thanks. Yes, we qualify for the exclusion but Turbo Tax is not recognizing it. I have gone through my answers twice. I didn't know if this was a glitch. I'm guessing I am entering something wrong. I'll keep working on it and start a new topic if I can't figure it out.

Thanks