Capital gains tax

What is the name of your state? MA
I'm selling my condo and must pay capital gains tax on my profit because I've lived there less than two years. According to my broker the only ways around this are: selling due to loss of a job, disability, or being transfered due to military obligations. I qualify for none of these. I'm selling not for financial gain, but because the condo is a one bedroom and my wife and I just found she is pregnant. Is this a legal means to avoid this tax.

Thank you

It is likely that you will be able to use the reduced maximum exclusion for any capital gains on the sale of you condo due to "unforseen circumstances" - one of the "safe harbors" to use the reduced max exclusion if you sell your home before living there for 2 years. "The sale of your main home is because of an unforseen circumstance if your primary reason for the sale is the occurrence of an event that you do not anticipate before purchasing and occupying your main home." Pregnancy could qualify for this.

You should read IRS Pub 523 "selling your home". You can find it here: http://www.irs.gov/pub/irs-pdf/p523.pdf

There are many specifics that you have not given us (ie who owns the condo - you or you AND your spouse; whether you have done any improvements to your condo that could be added to your basis, etc). Also, for owning less than 2 years, it is unlikely that your amount realized (selling price less selling expenses) will be more than your adjusted basis, unless you are in an area where real estate values are skyrocketing, so any gain would be minimal, and would likely fall within the reduced maximum exclusion. Worksheets 1 and 2 in pub 523 will help you figure out your adjusted basis and your gain and taxable gain.

-Christina