Question

Capital Gains Exemption unforeseen circumstances on a sale of the house

Forum|Forum|5 years ago
May 8, 2021
2 replies
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Hey guys,

I recently bought a home back in January. Recently my company let us know that I can work remote forever now. It turns out that I made a great purchase on the house back in January and a few people are reaching out to ask to purchase the house way above what I bought it at. I've only had the house for 7 months.

Could I try to claim"unforeseen circumstances," as in my employer is allowing me to work from home and I can leave my city and move elsewhere? So I don't have to realize ordinary income tax gain?

ColeenD3

No. Moving is your choice. You are not being required to move for work.

Work-related move.

You meet the standard requirements if any of the following happened during the time you owned and lived in the home you sold:

You took or were transferred to a new job in a work location at least 50 miles farther from home than your old work location.
You had no previous work location and you began a new job at least 50 miles from home.
Either of the above is true of your spouse, a co-owner of the home, or anyone else for whom the home was his or her residence.

X

xfactor85Author

I was thinking in regards to the "unforeseen circumstance" not the work exemption. Would there be any argument there?

ColeenD3

No. It is still your choice. There is no event causing you to move.

Unforeseeable events.

You meet the standard requirements if any of the following happened during the time you owned and lived in the home you sold.

Your home was destroyed or condemned.
Your home suffered a casualty loss because of a natural or man-made disaster or an act of terrorism. (It doesn’t matter whether the loss is deductible on your tax return.)
You, your spouse, a co-owner of the home, or anyone else for whom the home was his or her residence:

1.Died;

2.Became divorced or legally separated;

3.Gave birth to two or more children from the same pregnancy;

4.Became eligible for unemployment compensation;

5.Became unable, because of a change in employment status, to pay basic living expenses for the household (including expenses for food, clothing, housing, medication, transportation, taxes, court-ordered payments, and expenses reasonably necessary for making an income).

An event is determined to be an unforeseeable event in IRS published guidance.

A

AmeliesUncle

I agree with Colleen. The "Unforeseen Circumstances" means you have a specific situation that makes your house no longer suitable to live in.

But if you think you can make a great profit and find another home that suits your needs, go for it. But it will be taxable. In the event you do that, you might consider waiting until you pass the 1 year mark, as that will treat the gain as a long-term capital gain, which is lower tax than your regular tax bracket.