Posted by Dave T on December 02, 1998 at 19:45:20:
There are three exceptions that permit the homeowner to exclude some of the capital gain if the homeowner can’t meet the two-year ownership and use tests: (1) change of place of employment, (2) health, (3) other unforseen circumstances, to the extent provided in future IRS regulations. [Section 121(c)]
I believe that the Tax Technical Corrections Bill only provided for a proration of the $250000 ($500000 MFJ) exclusion rather than the actual capital gain. If I have this wrong, I invite the tax experts to correct me.
Under the old rules, a change of employment had to involve a job relocation greater than 50 miles from the previous job site. This is no longer in the tax law. Would changing employment within the same metropolitan area meet the compliance rule? What about moving back to parent’s hometown to become their caregivers when they are in ill health? Perhaps a lot of creative reasons will be advanced to qualify for this partial year capital gain exclusion
I have run into a slight problem. I would like to sell my personal residience but have only been living there a year. If possiblel, I don’t want to pay the taxes.
I have already purchased another home. Is there a way around the capital gains tax other than illegally renting for a year. Any help would be appreciated.
Posted by Bronchick on December 02, 1998 at 12:44:45:
If you live in your personal residence less than the required 2 year period, you get a proration for the exemption (e.g., live there 1 year, get $125k in exempt gains). Under the original rule, you had to show “special circumstances” to get the proration. I understand the rule has been changed and is a bit more liberal.