Submitted By: Angie
Answered: September 2, 2016 12:25 pm

My employer is relocating me and I have to sell my house. I haven’t met the two-year tests for the full home sale exclusion. Can I use a partial exclusion even though I’m with the same employer?

Yes. Gain on the sale of your principal residence is tax free to the extent of your home sale exclusion. The basic exclusion of $250,000 ($500,000 on a joint return) applies only if you owned and used the home for two out of five years preceding the date of sale. However, if you haven’t yet satisfied these tests, you can prorate the exclusion for the period of time you did meet them where the sale is because of a job change. The fact that you continue to work for the same company is irrelevant.

Tax Glossary

S corporation

A corporation that elects S status in order to receive tax treatment similar to that of a partnership.

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