Discussion:Home sale-exclusion
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Discussion Forum Index --> Basic Tax Questions --> Home sale-exclusion
Discussion Forum Index --> Tax Questions --> Home sale-exclusion
| 1 May 2008 | |
| Hi Everyone! I hope you're all rested and doing well. I have a question that I'm pretty sure is no, but I want to check if anyone has any other input.
I have a client that is now working overseas. When he had to leave, he started renting his houe. This was in June 2005. Now he has been trying to sell it before 6/1/08 to meet the 2 of the last 5 years rule. He said it's been having trouble selling and may close in the middle of June as opposed to the first of June. The middle of June gets him out of the 2 of last 5 rule. Is there any grace period? I don't think so, just checking. Thank you! | |
| 1 May 2008 | |
| While some on this board may disagree - If there is a substantial amout of gain in your clients residence - I would suggest looking into selling it to a controlled entity. I have a good article which explains this strategy; let me know if you would like me to email it to you. | |
| 1 May 2008 | |
| Sounds to me like your client might meet the requirements for a reduced exclusion since he had to sell the home in order to move overseas (unforseen circumstances). | |
| 1 May 2008 | |
| That article does sound interesting, but I don't think we have enough time to form a controlled entity.
He left overseas in 2005 and has been renting the property since that time. So I don't think the unforseen circumstances would work. If the fact that he's there longer than originally expected work as unforseen circumstances? | |
| 4 May 2008 | |
| Your client meets the reduced exclusion rule because of a change in place of employment not unforeseen circumstances.Assuming your client is married and the sale date reported on the final closing statement is July 1,2008 he would be eligible for an exclusion of $479,166 (23/24 X $500,000 ) IRS also allows you to calculate the exclusion on on mumber of days if you prefer. | |
