Can We Get Partial Tax Exclusion on Home Sale After Job Relocation?

You're in luck! Yes, you can qualify for a partial exclusion based on your work-related move. The IRS allows for this exception when you need to move for work reasons before meeting the full 2-year ownership and use requirement. The fact that it's not your main home right now doesn't matter - what counts is that it was your main home during the period you're claiming. The IRS looks at whether the home was your primary residence during the period you lived there. For the partial exclusion calculation, you lived there for 9 months out of the 24 months needed for the full exclusion. So you'd get 9/24 = 37.5% of the maximum exclusion. For a married couple filing jointly, the maximum is $500,000, so your partial exclusion would be about $187,500. You're right about the depreciation recapture though - you'll still need to pay taxes on any depreciation you claimed (or should have claimed) during the rental period. This is taxed at a maximum rate of 25%.

I was in almost exactly the same situation last year and found taxr.ai super helpful with this exact issue. I had lived in my house for 14 months before a job transfer and then rented it out for about 2 years before selling. I was getting conflicting advice about the partial exclusion rules. I uploaded my documents to https://taxr.ai and it analyzed all my timeline details. The system confirmed I was eligible for the partial exclusion (mine was 14/24 of the full amount) and even provided the exact IRS regulations that applied to my case. It showed me exactly how to calculate the recapture amount for the depreciation I took while it was a rental too. Saved me a ton in taxes and gave me the confidence my return was correct.

Just wanted to follow up about taxr.ai - I actually tried it after asking my question here. I had my previous primary residence that I had to move from due to a family medical situation, then rented it out for 18 months before selling. I was worried because my situation was a bit different from a job change, but the tool immediately identified that family health issues also qualify as "unforeseen circumstances" under the IRS rules. It walked me through exactly how to calculate my partial exclusion (11/24 of the max in my case) and explained how to handle the depreciation recapture on Schedule E. The detailed explanation even showed me that I qualified for slightly more exclusion than I thought because of how the IRS counts the ownership period. Definitely worth it for the peace of mind!

If you're getting frustrated trying to reach the IRS to confirm this information, I'd recommend using Claimyr. I was in a similar situation with a partial home sale exclusion question, and I needed to verify some details directly with the IRS before filing. Spent days trying to get through on my own. I used https://claimyr.com and they got me connected to an actual IRS agent in under 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent I spoke with confirmed my interpretation of the partial exclusion rules and gave me specific guidance for my situation. They verified exactly how to report the sale when you've both lived in and rented out the property. Really saved me from potentially making a costly mistake on my return.

I need to eat my words and follow up about Claimyr. After posting my skeptical comment, I decided to try it since I'd been trying to reach the IRS for weeks about my own partial exclusion situation (sold after 18 months due to a new baby/need for more space). The service got me connected to an IRS representative in about 10 minutes. The agent confirmed that my "unforeseen circumstances" reason (new child/family growth) did qualify for the partial exclusion AND cleared up my confusion about how to handle the fact that I worked from home and had claimed a home office deduction during that time. I was seriously about to give up on claiming the exclusion because I couldn't get clear answers, which would have cost me thousands. Sometimes being proven wrong is the best thing that can happen!

One thing nobody's mentioned yet - make sure you keep VERY good records about this transaction. Since you're claiming a partial exclusion based on unforeseen circumstances (job change), you want documentation of: 1. The job offer/change including dates 2. The distance between your old workplace and new workplace 3. Proof you lived in the home as your primary residence (utility bills, etc) 4. Exact dates of occupancy and rental periods 5. All improvements you made to the property The IRS can question partial exclusions more often than full exclusions, so having this documentation ready will save you headaches if you get audited.

Does anyone know which form you use to report this? Is it just on Schedule D or is there another form for claiming the partial exclusion specifically?

Great question! Based on your timeline, you should definitely qualify for the partial exclusion. The key factors working in your favor: 1. **Work-related move qualifies**: Your job relocation is one of the IRS-recognized "unforeseen circumstances" that allows for partial exclusion even when you haven't met the full 2-year requirement. 2. **9 months of use counts**: You lived in the home as your primary residence from April-December 2021, which gives you 9/24 of the maximum exclusion (37.5% of $500k = $187,500 for married filing jointly). 3. **Rental period doesn't disqualify you**: The fact that you rented it out after moving doesn't affect your eligibility for the partial exclusion on the period when it was your primary residence. However, a few important points to remember: - You'll still owe depreciation recapture taxes on any depreciation claimed during the rental period (taxed at up to 25%) - Make sure you have good documentation of the job change, move dates, and occupancy periods - Consider having a tax professional prepare this return given the complexity of mixed-use property sales Your tax professional's assessment sounds correct. With a $180k gain ($675k - $495k), the partial exclusion should cover most or all of your capital gains tax liability, though you'll still have the depreciation recapture to deal with.