Home Sale Exclusion

Use Worksheet 1 in Pub. 523. It's on page 7 of the 2018 edition. (The 2019 edition isn't available yet.) Section B of Worksheet 1 calculates the partial exclusion. It says you can use days or months.

Bob Sandler

Thanks Bob. I was afraid they might deny a hardship exemption to someone who didn't bother to sell the home they moved out of more than three years earlier. But it looks like a mechanical calculation simply based on the numbers.

Just what I needed to know.

Small technical point: It is not more than 50 miles away. It is at least 50 miles farther away than the current commute. As the example shows in Pub 523, if you were already commuting 15 miles, then the new job would have to be at least a 65 mile commute.

Right, that's what Pub 523 days, and you're right, it's a bit more complicated than just 50 miles away. The regulation is a bit more complicated still. It says that the partial exclusion is available when:

"The qualified individual's new place of employment is at least 50 miles farther from the residence sold or exchanged than was the former place of employment, or, if there was no former place of employment, the distance between the qualified individual's new place of employment and the residence sold or exchanged is at least 50 miles.

Treas. Reg ?1.121-3(c)(2)(ii)

So if the former commute was 15 miles, the new place of employment would have to be at least 65 miles away from the former house. It's about distance from the house that was sold rather than the current commute.