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