Sale of home

You say just above "...until I've owned the property for 24 months," Remember, ownership is not enough. Residence is required.

ChEAr$, Harlan Lunsford, EA n LA

You get to pro-rate it _if_ the sale is for an acceptable reason (there's a list of them, which I don't have immediately available). Seth

Yes, unless the sale is due to one of the special circumstances that trigger a prorated exemption. See IRS Publication 523.

-- Phil Marti Clarksburg, MD

The IRS web sight is pretty good with this information;

To be eligible for an exclusion, your home must have been owned by you and used as your main home for a period of at least two years out of the five years prior to its sale or exchange. The required two years of ownership and use during the five year period ending on the date of sale do not have to be continuous. You can meet the ownership and the use tests during different two year periods. However, both tests must be met during the five year period ending on the date of the sale or exchange. If you did not meet the ownership and use tests, or if during the two year period ending on the date of the sale or exchange you sold or exchanged another home at a gain and excluded all or part of that gain, you may be allowed to exclude the gain realized on the sale or exchange of your home if:

• You sold or exchanged your home due to a change in place of employment or health or unforeseen circumstances. So, I hope this covers you. If not, you can figure out what the sale will cost you, and negotiate for a delayed sale. It would be a shame if a month cost you tens of thousands. A buyer would probably be happy to help you out for a cut. JOE

"lls8000" wrote

Any allowed exclusion would depend on the *why's* of you selling. Is it for a job change (to another city?), the birth of twins?, a death in the family?, loss of a job?, or what? Beyond that, only the gain amount, not what you take from the closing table, is taxed. And since you lived there for more than 12 months, it's at the capital gains tax rate. There may be very little gains in 20 months when you factor in the closing costs on the front and the back end. Real estate commissions of 6 - 8 % eat up most gains in less than two years.

-- Paul Thomas, CPA snipped-for-privacy@bellsouth.net

The pro-ration is only for specific circumstances on the sale of the home including moving for a job, or other unforeseen circumstances. You will be paying 15% tax on the gain (sales price less selling costs less purchase price) unless you own and live in the house for 2 years (out of the last 5). Wayne Rivers, CPA

The only way you can qualify for a pro-rated exemption of the tax on the capital gains is if you fall into one of the exceptions. Basically, if you were forced to sell the home early because of unforeseen circumstances, then you can qualify for a proration. These include things like taking a job in another community, having multiple births, etc. Otherwise you will have to pay tax on all of the capital gain. Dennis