Real estate capital gains exclusion question

[LUCKYTNMOM]

We moved to TX for my husband's new job and purchased a house in Dallas.  Then, the pandemic hit and 18 months later, my husband accepts a position with a new company.  The new company will allow us to move back to TN and work remotely.  Will my husband's job change suffice to award us a partial capital gains exclusion or do I need to get a job in Tennessee to justify the move and be awarded the partial exclusion?

[MinhT1]

Only one spouse needs to satisfy the requirements of a work-related move to have the benefit of the partial exclusion of capital gains from the sale of your home.

Please read page 6 of this IRS publication.

[LUCKYTNMOM]

Thank you.  Does this mean that even though my husband will not physically go into an office in Tennessee, we still qualify for the reduced capital gains exclusion based solely on his job?  

[NCperson]

@LUCKYTNMOM - @MinhT1 didn't not state you were in the clear; all @MinhT1 stated was that one of you had to meet the eligibility test 

I would be very, very careful with this one... If you are inferring that your husband's new employer would have been 'fat dumb and happy' for him to remain in your TX home and do the job remotely from there, meaning there was no requirement by the employer to be in TN, then how does the partial exclusion apply? How were you 'transferred in a work location at least 50 miles away' if the employer did not require it???

and if you decide to just take a job at McDonalds in TN, which requires you to be there, the partial exclusion would be on $250,000, not $500,000 is the way I read it. see the line in red below

on the other hand, if you two just stay in TX for 6 more months, it won't matter.  But even with that be careful, if you move to TN while he waits out the 6 months in TX, then he meets the 2 of 5 year test, but you would not.  If the gain is under $250,000, it doesn't matter.  

Here is the actual IRS wording in publication 523: 

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.
• You had no previous work location and you began a new job at least 50 miles from the home.
• Either of the above is true of your spouse, a co-owner of the home

[ColeenD3]

This is the IRS wording. If you think it applies to your situation, then you qualify.

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.

• You had no previous work location and you began a new job at least 50 miles from the home.

• Either of the above is true of your spouse, a co-owner of the home, or anyone else for whom the home was his or her residence.

[NCperson]

@ColeenD3 - this one is interesting... I read  Pub 523 as an employer requirement to move.. in this case there appears to be no employer requirement to move, it's just a convenience to move from TX to TN.  I agree it's the right wording to review, I am just hard pressed where the qualification lies to meet the requirements.  

[Carl]

The new company will allow us to move back to TN and work remotely.

That statement indicates (to me at least) that the move is not a requirement of employment, and is not for the convenience of the employer. Additionally, you won't be living within 50 miles of the new employment location, but instead will be moving farther away. So you would not qualify for the capital gains exclusion.

Also, if you sold a home within the last 2 years and took the capital gains exclusion, then you can't qualify for the exclusion again for 2 years after the closing date on the sale/exclusion of gain on the home you sold.

[LUCKYTNMOM]

Thank you for your answer.  We will be moving closer to the home office (it's located in Florida) and more central to the rest of the US market.  But, we have put a call into our accountant as we want to be sure that we are following the letter of the law.