If you do not meet any of the qualifications for a reduced home sale exclusion, the capital gains rates are 0%, 15%, or 20% depending on your other income.
See the following from the IRS regarding the sale
of a home:
However, if you don’t qualify for
the full exclusion, you may qualify for a reduced exclusion if one from any
from a number of listed unforeseen occurred.
The reduced exclusion percentage
is calculated by dividing the number of days that you lived in the home divided
by the number of days in two years. That percentage is multiplied by the full
exclusion amount of 250,000 dollars (or 500,000 dollars for married joint
filers).
The listed unforeseen events are
as follows:
Work-related move. You meet the standard requirements if any
of the following happened during the time you owned and lived in the home you
sold:
- You took or
were transferred to a new job in a work location at least 50 miles farther
from home than your old work location.
- You had no
previous work location and you began a new job at least 50 miles from
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.
Health-related move. You meet the standard requirements if any
of the following happened during the time you owned and lived in the home you
sold.
- You moved to obtain, provide, or
facilitate diagnosis, cure, mitigation, or treatment of disease, illness,
or injury for yourself or a family member.
- You moved to
obtain or provide medical or personal care for a family member suffering
from a disease, illness, or injury.
- Family
includes:
- Parent,
grandparent, stepmother, stepfather;
- Child,
grandchild, stepchild, adopted child, eligible foster child;
- Brother,
sister, stepbrother, stepsister, half-brother, half-sister;
- Mother-in-law,
father-in-law, brother-in-law, sister-in-law, son-in-law,
daughter-in-law;
- Uncle, aunt,
nephew, niece, or cousin.
- A doctor
recommended a change in residence for you because you were experiencing a
health problem.
- 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.
Unforeseeable events. You meet the standard requirements if any
of the following happened 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:
- Died;
- Became
divorced or legally separated;
- Gave birth to
two or more children from the same pregnancy;
- Became eligible for unemployment compensation;
- 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).
An event is
determined to be an unforeseeable event in IRS published guidance.
