Sale of property, lived in 1 yr and rented 3 yrs. capital gain exclusion?

What is the name of your state? California


I own a property in California that was first purchased as my principal residence. I had lived in it for 1 year, and had later moved out and made it available for rent. Last June I had moved back into my property. Just days after moving into this property, I was laid off from my job. I stayed in the property for a month and a half, and
in order to maintain some financial stability I moved in with family members and re-rented out the property. After an unsuccesful job search in my home city, I was offered a very good position that required relocation out of state. My current tenant is on a lease, but I am thinking about selling the property when the lease comes up.

Would I possibly qualify for any exclusion from capital gain taxes on the sale of this property?
I had not depreciated the property while it was being rented. Would I have a valid claim of exclusion because I had moved out of state in order to seek employment?

any help would be greatly appreciated!!!

[abezon]

Well first, go to HR Block or someone else & amend your last 3 years of taxes to claim that depreciation. When you sell the house, you'll pay a higher tax rate on "recaptured depreciation", which is any depreciation that you took *or could have taken*.

If you sell a home due to job relocation, you are eligible for a reduced exclusion. Instead of the usual $250,000, your exclusion is prorated according to the number of months you lived in the home. This will likely allow you to exclude any gains on the property, other than 'gains' that are the recapture of depreciation "allowed or allowable". See why you want to amend thos old returns? You're going to pay taxes on that depreciation whether you claimed it or not, so you might as well claim it & get some refunds now so you can pay the taxes when you sell.

To take advantage of the reduced exclusion, you need to sell the house due to your job relocation. This probably means you should sell it within a year of moving.

Thanks a million for your very helpful advice!!!