Question

Last year I was able to defer some capital gains from a home sale due to a divorce. I have a primary home I want to sale this year will I be exempt from capital gains?

Forum|Forum|5 years ago
May 3, 2021
1 reply
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The residence I sold last year I had as a primary residence for only 4 months. The home I would like to sell this year I have lived in for over 5 years. Since I was able to defer some capital gains last year I am worried the home I sell this year I won't be able to do so.

TurboTax Self Employed Online

H

HelenC12

That income is free and clear as long as:

You owned the home.
It was your main home for two years or more within the five years leading up to the sale.
You waited at least two years between selling your primary home and excluding your first $250,000 or $500,000 from taxes. In other words, you may buy and sell as many primary homes as you'd like, but you'll only get this tax benefit every two years.

TurboTax will show you if your home sale is taxable.

Open or continue your return in TurboTax.
Search for home sale.
Select the Jump to link in the search results.
Answer Yes to Did you sell or have your home foreclosed in 2020? on the Sale of Your Main Home screen.
Follow the instructions to enter your info.

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N

nickoliver90Author

Thanks for the information. I understand this situation.

I was able to find more information on the IRS website. Last year I took a partial exclusion since I lived there for a short time.

I believe this means I would I have to wait 2 years to sell my primary home now. So I have the option of amending my 2020 return and paying the taxes on the sale last year if it would be less than this years.

O

Opus 17

Employee

@nickoliver90

You did not “defer“ your capital gains, you excluded it and those are two very different things. You are correct that because you used the exclusion less than two years ago, you can’t use it again. You are also correct that if you want to use the exclusion on your current home, you would have to amend your prior return to pay the capital gains tax on the previous home.