Partial Exclusion on home sale recording keeping

[Closek]

Hello, 

My husband and I are selling our home after living in it for 16 months. He lost his job back in August 2021 and from aug-dec he ubered to try to make ends meet - but it did not. However we had to pull two 401k loans out to cover our expenses and as of Dec 31 he has been unemployed and we have sold one of our cars (with negative equity). Based on our financial debt we can no longer afford the home.

I wanted to know if we would still qualify for the partial exclusion bc of the Change in Employment point under unforseeable events. And what types of documentation we need to keep to support it. 

Thank you 

[MaryK4]

Yes, based on your description, you would qualify for the partial exclusion based on unforeseeable events.

You meet the standard requirements if any of the following events occurred during the time you owned and lived in the home you sold.

• Your home was destroyed or condemned.

• Your home suffered a casualty loss because of a natural or man-made disaster or an act of terrorism. (It doesn’t matter whether the loss is deductible on your tax return.)

• You, your spouse, a co-owner of the home, or anyone else for whom the home was his or her residence:

  1. Died;

  2. Became divorced or legally separated;

  3. Gave birth to two or more children from the same pregnancy;

  4. Became eligible for unemployment compensation;

  5. Became unable, because of a change in employment status, to pay basic living expenses for the household (including expenses for food, clothing, housing, medication, transportation, taxes, court-ordered payments, and expenses reasonably necessary for making an income).

  6. An event is determined to be an unforeseeable event in IRS published guidance.

[Closek]

Thanks. What types of paperwork or documentation do we need to keep record of?

[MaryK4]

I would recommend the bank statements and the pay statements from uber- keep copies of them with your tax records for at least three years.  You will be able to also use the information from your tax returns.  I truly wish you well and hope things turn around!

@Closek