Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

  • Enter your email address to subscribe to this blog and receive notifications of new posts by email.

    Join 678 other followers

  • Blog Stats

    • 307,375 hits
  • Posts By Day

    February 2009
    M T W T F S S
  • Subscribe

  • Special Pages

Prorated Home Sale Exclusion

Posted by taxguru on February 14, 2009


Subject: Home Sale Gain Exclusion

5 years ago, was laid off in Minnesota and had to settle for a California job.
Commuted every 2 weeks for 1 year then moved family to a rental.
Wife and children lived in MN home every time children not in school (about 3 months per year), nevertheless total days is well shy of 730.

Kept a car registered in MN, voted in MN, kept MN drivers licenses, bank account in MN while trying unsuccessfully to transition to a job back in Minnesota.  Even had several in-person interviews in MN over the years.

Finally gave up & sold in Minnesota; just closed.  We expected to exclude 50K of gain.

Can we
A) Exclude the gain because our beloved MN home was our primary residence defined by that we never bought anything else and always considered & treated it as “our home”.
B) Exclude the gain because the wife was always staying there… it may be shy of 730 days but there is no way to audit that.
C) Exclude the gain because I was forced to sell due to a job situation and we used it as a primary residence for 1 year, 50% of the 2 year standard, and all we need to exclude is $25K apiece.




You need to be working with an experienced professional tax advisor to make sure you do things properly here.

It looks like you should be able to qualify for the prorated tax free exclusion based on your change in employment.  Since your gain is only 10% of the total possible Section l21 exclusion of $500,000, there shouldn’t be a problem in excluding the full amount of your profit.
However, your personal professional tax advisor will be better able to evaluate the details of your situation and decide if that is the case.

Good luck.

Kerry Kerstetter




Sorry, the comment form is closed at this time.

%d bloggers like this: