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| *Loan,banking and credit>>>real estate tax |
Real Estate and Capital Gains Tax Question? |
I have lived in a condo for just under 4 years. I have owned the place for 19-20 months and my place is on the market. I moved in with an agreement with the developer to buy the place on certain terms. The developed reneged and we had to litigate for a year to get the original terms. If I had bought when I should have, I would have owned my place for nearly 3 years by now. According the IRS I meed the usage test but I do not meet the ownership test when considering the actual date of purchase. Is there some type of exception for someone like me who was in litigation with the developer and seller to exclude some of the capital gains on the property? The litigation will have no impact. You will be hard pressed to make a case for exclusion if you have not owned the property for the required 24 months. I would not allow the sale to close until you have reached that goal. your unique situation suggests that you need a private letter ruling from the IRS, or to discover one that has already been issued that covers your situation. a serious tax professional can check the ones that have been issued already and/or apply for one on your behalf if needed. the ordinary person's solution would be to arrange for the closing date on his sale to be 2 years and a day after the recorded date of his deed ... even if this means that he rents the place to the buyer for a month or three. GL MBA/CPA ... and no, I do NOT do tax work. Hate it. No, but if the timing is close, you might work on delaying the closing until you meet the 24 months. The 24 months of ownership does not have to be the same 24 months as the months you lived there. If you are moving for job reasons, you can most likely take a reduced exclusion of gain that would probably cover you. There is no specific exception for the situation you describe. However, if you are moving to take another job, or you got married and your home is too small, or additional children were born and your home is too small, etc., then there can be exceptions for that. If you have owned the house 20 months and you get an offer in the next month, I suggest you delay closing until you have owned the property 24 months. That way you are in the clear for your full exclusion. |
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