Sale of second residence

[PAresident]

What is the name of your state? PA
I recently sold my second home and would like to know if I qualify for a reduced exclusion.

History:
Purchased home 1984 (in Downingtown PA)
Live in residence from 1984-1987
My mother lived in residence from 1989-1993 (no rent, no expenses)
I maintained the residence, all the while, as a retirement home as I planned for PA as the state to which I would eventually retire. Never rented or used by anyone else, solely kept up by myself and spouse.
I lived in VA and changed jobs (10/1999) and sold the house there (1/2000) and relocated to Bellefonte PA.
Since I relocated to PA (my eventual location for retirement), I felt no need to keep the home in Downingtown PA and sold it (7/2004).

Do I qualify for an exclusion because of the following?

From Publication 523:
"I" did not meet the ownership and use tests, but the reason "I" sold the home was: A change in place of employment.

What is the reduction on the exclusion?

[Snipes5]

You get the reduced exclusion for the portion of time in which you met the ownership and use tests. Since you did not live in the house at any time in the five years prior to the sale, and since, from your comments we may conclude that you are not in the Military or the Diplomatic Service, you get no exclusion.

The "extenuating circumstance" that they refer to in that pub is referring to an immediate circumstance, not what you describe.

Snipes

[PAresident]

State: Pennsylvania

Thank you for the information. You were extremely helpful.

The publications for schedule D are very limited as to how to file in my particular case. Are there better resources to find out what is a valid deduction to reduce the tax liability on the gain? I have extensive amount of materials from the last 20 and need to sort them as to what was an improvement vs. expense vs. other. Can utility costs (particularly heating) be used as a deduction as the house needed to be keeped up in all weather conditions over the years?

[Snipes5]

Take your info to a tax professional who can help you sort this out.

Normally, you can add to the basis the costs of any material IMPROVEMENTS to the property.

Utilities are not an improvement, unless you actually had the utilities put in on what was undeveloped land.

Improvements are things like additions, sidewalks, fences, driveways, landscaping, etc.

NOT improvements would be repairs, such as new roof, new furnace, hot water heater, etc.

Basically if the house had something and you replaced it, that is a repair, not an improvement, though you may be able to claim the difference between the cost of hardwood flooring vs. original carpeting, and other such improvements, like commercial grade appliances and granite countertops vs. ordinary appliances and formica.

Snipes

[PAresident]

State: Pennsylvania

Again, that you for your time and consideration in responding to my questions.