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sold house too early

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What is the name of your state? CA

I sold my house that I lived in for 1 year. I heard that I can get capital gain tax exemption if I roll-over my profit to a new house within 2 years. Is this true?



I moved because I wanted to be close to my folks. I am currently staying in an apartment which is 20 miles away from work. My old house is only 7 miles away from work.

I sold my house last May and I'm hoping to buy another house late this year or early next year. The area that I'm interested to buy is within 20 to 30 miles away from work.


Defering capital gains on a personal home by buying another home within 2 years is not allowed anymore. Instead, an exclusion is allowed if you own and live in the home 2 of the previous 5 years.

If you do not satisfy this ownership and use test, a reduced exclusion is allowed if you sold the house for any of the following reasons:

1. A change in place of employment,
2. Health, or
3. Unforeseen circumstances, to the extent provided in regulations.

However, the IRS has not issued regulations defining unforeseen circumstances, so number 3 does not apply until the IRS issues final regulations or other appropriate guidance.
(Makes you want to run away with the circus.)

In other words, moving to be closer to your parents does not apply unless a case can be made that it's for YOUR health.

The gain is reported on Schedule D. You may want to save enough to cover your increased tax liability for both federal and state.


Senior Member
Send the facts to the IRS (parents' health suddenly declined and you need to be close) for a private letter determination. The IRS will tell you if you qualify for a reduced exclusion.

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