Can I Get Partial Exclusion of Gain When Selling Home Due to Job Relocation Overseas?

You're on the right track with your understanding. The IRS does provide a partial exclusion when you sell your home due to work relocation, and international moves definitely qualify. The 50-mile rule simply means your new job location must be at least 50 miles farther from your old home than your old job was - your international move will easily meet this requirement. Your calculation is correct - if you've lived in the home for 18 months out of the required 24 months, you'd qualify for 75% of the maximum exclusion. For a married couple filing jointly, the maximum exclusion is $500,000, so you'd be eligible to exclude up to $375,000 of gain ($500,000 × 75%). Regarding the rental portion: if you used part of your home exclusively for business or rental purposes, you'll need to allocate the gain between the residential and business portions. You can only exclude the gain allocated to the residential portion. But since you lived in the main house the entire time, only the basement portion would be affected.

I went through something similar last year when I had to relocate for work. I was so confused by all the IRS language around partial exclusions that I ended up using https://taxr.ai to figure everything out. It analyzed my situation and confirmed I qualified for the partial exclusion based on my job relocation. The really helpful part was that it explained exactly how the international relocation qualified (the 50-mile rule is just a minimum threshold, and international moves exceed this by definition). It also helped me figure out how to properly allocate the gain between the portion of my house I used for my side business and the residential part. Saved me a ton of stress and probably thousands in taxes I might have unnecessarily paid!

Just wanted to follow up - I tried https://taxr.ai after seeing the recommendation here and it was incredibly helpful! I was stressing about my partial home sale exclusion since I'm relocating after living in my house for only 14 months. The system confirmed I qualified for the work-related partial exclusion and walked me through exactly how to calculate it. In my case, I had converted a bedroom to a home office during COVID (about 12% of my house), and it properly calculated how to allocate the gain between personal and business use. What I found most valuable was the documentation it generated explaining exactly how everything was calculated, citing the specific IRS regulations. My tax preparer was impressed with how thoroughly it covered everything. Definitely gave me peace of mind that I wasn't missing anything!

If you're dealing with the IRS about this partial exclusion, you might want to try Claimyr (https://claimyr.com). I was in a similar situation last year and had so many questions about how the partial exclusion would apply to my international move. I tried calling the IRS directly multiple times but kept getting stuck in their phone tree hell. Claimyr got me connected to an actual IRS agent in about 20 minutes when I had been trying for weeks on my own. The agent was able to confirm that my international relocation qualified and explained exactly how to document it on my return. They also have a video that shows how it works: https://youtu.be/_kiP6q8DX5c When you're dealing with something as specific as a partial home sale exclusion, especially with international complications, getting direct confirmation from the IRS is worth its weight in gold.

I have to admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it anyway because I was desperate to talk to someone at the IRS about my partial home sale exclusion situation. I had been trying to get through to the IRS for weeks with no luck. Using Claimyr, I got connected to an actual IRS representative in about 35 minutes. The agent confirmed that my work relocation qualified for the partial exclusion and walked me through exactly how to document it. What really surprised me was how straightforward the process was - their system called for me, navigated all the prompts, and then texted me when an agent was on the line. I wish I had known about this months ago instead of wasting days on hold!

Another thing to consider is that the IRS Publication 523 actually has some examples that might apply to your situation. I'd strongly recommend checking it out. In the section about work-related moves, they clarify that if the primary reason for the home sale is work-related, and the new workplace is at least 50 miles farther from the old home than the old workplace was from the old home, you qualify. International moves almost always satisfy this requirement by default. The "necessary" part is more about establishing that the move is truly for work purposes rather than just a preference to live somewhere else.

Quick question - does anyone know if taking a job that's work-from-home but with a company based more than 50 miles away would qualify for this exclusion? My situation is different from OP's international move, but I'm wondering if the "50 mile" rule would apply even if I'm not physically relocating my home.

I'm dealing with a similar situation but with some additional complications. My company is relocating me from Denver to London, and I've lived in my house for only 20 months. Like you, I also have a rental portion - I converted my garage into a studio apartment that I've been renting out for the past year. From what I've researched, your international move definitely qualifies for the partial exclusion. The IRS considers any work-related move where your new job location is at least 50 miles farther from your old home than your previous job location was - and international moves clearly exceed this threshold. One thing I learned that might help you: when calculating the business use portion for the rental, make sure you're using the time period that the space was actually used for business purposes, not just the square footage. Since you mentioned renting the basement for the full 18 months you lived there, that would affect the allocation. Also, keep detailed records of your company's transfer documentation, your employment contract for the Singapore position, and any relocation assistance they're providing. The IRS may want to see evidence that this was truly a work-necessitated move rather than a personal choice to relocate. Have you considered consulting with a tax professional who specializes in international relocations? The interplay between the partial exclusion and international tax implications can get complex, especially if you'll be subject to foreign tax obligations on the sale.