Can I partially exclude home sale gain since I lost my job?

November 29, 2004

Subject:  Tax break on selling my home?
Date:  Mon, 15 Nov 2004
From:  Paul

Hello Mike,

I have a home in Hayward, which I lived in for about a year. I lost my job in 2002. Since then, I moved to a less expensive home in Stockton, CA and have been living on savings while renting out the home in Hayward. I can't hold onto the Hayward home anymore and have to sell it. How much tax will I have to pay on the gain? Does an exclusion apply in this situation?



Date:  Wed, 24 Nov

Hello Paul,

You may be eligible for a partial exclusion of gain because you are selling the home relating to the unforeseen circumstance of losing your job. (Reg. ยง 1.121-3(3)(2)(iii)(B).) If you lived in the home for 12 months and you are a single person, you would be able to exclude $125,000 of gain from the sale of the residence. (12/24 X $250,000)

The accumulated depreciation during the rental period isn't eligible for exclusion and will be subject to a maximum federal tax rate of 25%. The maximum California tax rate is 9.3%. You should meet with a tax advisor to determine the actual rates that apply for your situation.

Good luck!
Mike Gray

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