We moved last year due to a PCS (military)and sold our house but we were there less than 2 years how will i enter that so i dont pay the capital gains tax?

[dustin-r-william]

I know military is not made to pay this tax due to PCS i just want to make sure I do this part right on our tax form as ive never done it before.

[DawnC]

You will enter the sale as normal, use the instructions below.   After you enter the sale information, you will be asked the reason for the sale.   Choose Other Reasons.   On the next screen, you will choose Military, foreign service, IC employee, Peace Corp.   Don't panic if you see the tax due jump before you complete the process, it will adjust when you apply the military status.  

If you or your spouse are on qualified official extended duty in the Uniformed Services, the Foreign Service or the intelligence community, you may elect to suspend the five-year test period for up to 10 years. An individual is on qualified official extended duty if, for more than 90 days or for an indefinite period, the individual is:

• At a duty station that's at least 50 miles from his or her main home, or
• Residing under government orders in government housing.

Refer to Publication 523 for more information about this special rule to suspend the 5-year test.

If you were entitled to take depreciation deductions because you used your home for business purposes or as rental property, you cannot exclude the part of your gain equal to any depreciation allowed or allowable as a deduction for periods after May 6, 1997. 

Where do I enter a home sale -    You are going to search for home sale  or  sale of home (either works).   Tell TurboTax you want to enter the sale whether you have a 1099-S or not; it isn't required.   If you can exclude the entire gain, the sale won't be reported on your return.  

Military State Info

Publication 3 - Armed Forces Guide

And thank you for your service!

[dustin-r-william]

Thank you so much for your help Dawn! So, I’ve seen where i get to that part and do that step but I'm confused on this page and how to answer. Do i answer yes or no because either way i answer even after entering in the military option it says we owe the capital gains tax, does that adjust later in the process? And either way I still need help on how to answer this question the correct way because i don't understand the lingo to be honest.

 

Member of Military or Foreign Service

If you didn't meet the two-out-of-five years rule because you were on active duty, you may be able to qualify using the special rules.

For every month that you were on qualifiedextended duty, you can extend the five-year period, up to a maximum of 10 additional years. This means that to qualify for the home sale exclusion you must live in the home for 24 months out of up to 15 years, depending on your length of extended duty.

Using these special rules, did you live in the home for at least 24 months during your qualifying period?

[DaveF1006]

Yes, you would need to have lived in the home for at least two years during this qualifying period, this means 2 years (24 months) out of the 15-year extended qualifying period. So if you did live in the home for at least 2 years (24 months), you will say yes.

[dustin-r-william]

Hi Dave! Thanks for the reply, so we did not live in the house for 2 years as stated in the thread above we are military and moved due to a PCS so thats why i was checking on how to answer this question correctly. I’ve already chosen the military option for reason of move on the previous page so on this page if i answer “no” will it still correct itself so we don't pay the capital gains tax at the end because after this question its telling me we owe it even though i know we don't. Thank you again for your help

[rjs]

@dustin-r-william 

I think you have misunderstood the tax law. It's not true that you don't have to pay tax on the gain from selling your home if you are in the military. In order to exclude the gain, you have to have owned and lived in the home for 2 years. Being in the military, and moving for a PCS, does not eliminate that requirement. It may give you a much longer window to meet the 2-year requirement, but you still have to meet it at some point. If you sold your home without ever having owned and lived in it for a total of 2 years, you do not qualify for the full exclusion of gain. You might qualify for a partial exclusion of gain.

In IRS Publication 523, Selling Your Home, see "Service, Intelligence, and Peace Corps personnel" on pages 4 - 5.

In IRS Publication 3, Armed Forces' Tax Guide, see "Gain or Loss From Sale of Home" on pages 17 - 18.

Many military bases have someone who helps service members with their taxes. That person will certainly be familiar with all of these rules. You might want to consult that person.