If I have to move because of a job relocation, do I have to pay capital gains on the sale of my home?

by William L. Stunkel, CPA | May 14, 2018
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We bought our house a year and a half ago in Colorado. My husband has been offered a job in Florida, and needs to move immediately. I want to sell our house in July and move to be with him in Florida. Would that qualify for the partial exemption to capital gains tax on the sale of the house before two years? It says the person moving for the job needs to have been living in it right before moving, but he would have been gone for a few months before I put it on the market.

Assuming you and your spouse will be filing a joint tax return, the facts you provided indicate you should be allowed a partial exclusion of any gain incurred on the sale of the house. According to the regulations, eligibility for a partial exclusion for change in employment has to occur when "The change in place of employment occurs during the period of the taxpayer's ownership and use of the property as the taxpayer's principal residence."
 
Because you and your spouse lived in the house as a principal residence for different time periods, an example provided in the regulations indicates the maximum allowed exclusion is calculated by each of you individually based on the number of months or days you lived in the home. This can get tricky since more than one formula is involved, so you may want to consult a CPA for guidance.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: William L. Stunkel, CPA, is director of small business services with Holsinger PC in Wexford, Pa.

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The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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