You may. You were not living there the entire two years. You might qualify for a partial exclusion.
Does Your Home
Qualify—Details and Exceptions
Partial Exclusion
May Be Available
If you don't meet
the eligibility test, you may still qualify for a partial exclusion of gain if
you moved because of work, health, or an unforeseeable event. You can qualify
either by meeting a set of standard requirements (the “safe harbor” provisions)
or by showing enough facts and circumstances to validate your claim.
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, ill-
ness, or injury.
Family includes:
1.Parent,
grandparent, stepmother, stepfather;
2.Child, grandchild,
stepchild, adopted child, eligible foster child;
3.Brother, sister,
stepbrother, stepsister, half-brother, half-sister;
4.Mother-in-law,
father-in-law, brother-in-law, sister-in-law, son-in-law, daughter-in-law;
5.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:
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).
An event is
determined to be an unforeseeable event in IRS published guidance.
Showing facts and circumstances.
If your
circumstances don’t match any of the standard requirements described above but
the primary reason for sale, based on facts and circumstances, is work-related,
health-related, or unforeseeable. Important factors are:
- The situation causing the
sale arose during the time you owned and used your property as your
residence.
- You sold your home not long
after the situation arose.
- You couldn’t have reasonably
anticipated the situation when you bought the home.
- You began to experience
significant financial difficulty .
From
<https://www.irs.gov/pub/irs-pdf/p523.pdf>
