Partial Exclusion for Capital Gains on Sale of Real Estate

By
Education & Training with Jody Bruns, LLC NMLS 831033

Did you know your sellers might not be totally out of luck with regards to their Capital Gains Exclusion if they sell within 2 years of purchase?

 

We all know you have to live in your home for 2 of the previous 5 in order to use your full exclusion of $250,000 single or $500,000 married on the Capital Gains in the sale of real estate. However, did you know that even if you don't meet all the home-sale exclusion tests, your tax break might not be totally lost.

 

When an owner sells a house because of special conditions, such as a change in health, employment or unforeseen circumstances such as divorce, he or she is eligible for a prorated tax-free gain.

 

In such a case, the seller first calculates the fractional amount of time that he or she met the 2-year use test. For example, a single homeowner is transferred to a job in another city and sells after being in the home for only a year and a half. That would be an occupancy period of 18/24 or 0.75, the number of months lived in the home divided by 24, the number of months in the 2-year occupancy requirement. By multiplying the full $250,000 exclusion amount by 0.75, the seller would be eligible to exclude a sale gain of up to $187,500.

 

Hopefull this short blog post will be a valuable tidbit in your toolbox of knowledge!

 

Jody

 

 

Posted by

Niche Marketing for Real Estate & Mortgage Professionals

www.JodyBruns.net

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
ActiveRain Community
Location:
Colorado Denver County
Tags:
jody bruns
capital gains exclusions
selling real estate with a capital gain

Spam prevention

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
30,183

Jody Bruns, CDLP

Niche Marketing Expert in Real Estate & Mortgage
Ask me a question
*
*
*
*