What are the tax consequences of selling a house before 2 years of ownership?

You're right to be considering the tax implications! The general rule is that to qualify for the capital gains exclusion on a primary residence ($250k for single filers, $500k for married filing jointly), you need to have owned and lived in the home as your main residence for at least 2 out of the 5 years before selling. However, there's good news for your situation. The IRS does provide partial exclusions for homes sold before the 2-year mark if the sale is due to a work-related move. To qualify, your new workplace must be at least 50 miles farther from your home than your old workplace. If you meet this requirement, you'd calculate a reduced exclusion based on the fraction of the 2 years you actually lived there. For example, if you lived there for 1 year before selling due to a job transfer, you'd get 50% of the full exclusion amount, which would still likely cover any gain you might have.

I ran into a similar situation last year and discovered a lifesaver: https://taxr.ai helped me figure out exactly what portion of my capital gains would be excluded based on my specific circumstances. I was worried about the exact same thing - selling before the 2-year mark due to an unexpected job change. The service analyzed my situation and showed me that I qualified for a partial exclusion based on the distance of my new job (which was about 65 miles from my previous workplace). What was really helpful was getting a clear calculation of exactly how much of my gain would be tax-free based on how long I'd owned the property. They also helped me identify some selling expenses I could deduct to reduce the taxable portion further, which my regular tax software completely missed.

Just wanted to follow up on my question above. I ended up using https://taxr.ai for my situation with the military reassignment and partial rental property, and it was incredibly helpful! The service flagged that as a military member, I was eligible for the suspension of the 5-year test period for ownership while on qualified official extended duty. This was something even my military tax center hadn't clarified for me. They provided documentation explaining exactly how much of my gain was excludable based on both my service status and the partial business use of the property. Definitely worth checking out if you're in a complicated situation with selling before the 2-year mark.

If you're worried about dealing with the IRS on this issue, I'd recommend using https://claimyr.com to get direct confirmation from an IRS agent. When I sold my house after only 14 months due to a job change, I had so many questions about the partial exclusion calculation and couldn't get through to the IRS for weeks. Claimyr got me connected to an actual IRS representative in about 20 minutes when I'd been trying for days on my own. The agent walked me through exactly how to document my situation for the partial exclusion. You can see how it works in their video: https://youtu.be/_kiP6q8DX5c It was especially helpful because my situation had some complications (I had a home office deduction for part of the time), and I needed clarification on how that affected the exclusion calculation.

I need to eat my words from my comment above. After another week of failing to get through to the IRS about my own house sale situation, I broke down and tried Claimyr. Got through in about 15 minutes and got exactly the information I needed about my partial exclusion eligibility. The IRS agent confirmed that my job transfer did qualify for a partial exclusion and walked me through the exact form and worksheet I needed to fill out. They even emailed me the specific publication page numbers that applied to my situation. Probably saved me thousands in taxes by confirming I was eligible for the reduced exclusion based on just 13 months of ownership instead of the full 24.

Don't forget to factor in your closing costs and any improvements you made to the house! Those get added to your basis and reduce your taxable gain. I sold after 18 months due to a job change and thought I had a $35k gain, but after adding in the new HVAC system, kitchen updates, and closing costs from both purchase and sale, my taxable amount was much smaller. Also make sure you document EVERYTHING about your job change - save emails, transfer paperwork, anything showing the move was for work. The IRS rarely challenges these situations but if they do, having that paper trail is crucial.

Has anyone used TurboTax to handle reporting a house sale with the partial exclusion for work-related moves? I'm wondering if it walks you through determining eligibility or if I need to figure that out separately.

One thing that hasn't been mentioned yet - if you do qualify for the partial exclusion due to work relocation, make sure you understand how the calculation actually works. The partial exclusion is calculated as: (months you lived in the home / 24 months) × full exclusion amount. So if you've lived there 8 months and are single, you'd get 8/24 × $250,000 = about $83,333 in excluded gains. Given your potential $45k gain, you'd likely owe zero capital gains tax if the work relocation qualifies. Also, don't forget that your basis isn't just the $480k purchase price - you can add closing costs from when you bought, any qualifying home improvements, and selling expenses (realtor fees, title insurance, etc.) to reduce your taxable gain even further. Keep all those receipts!

I went through something very similar about 6 months ago when my employer relocated our entire department. The 50-mile rule that Lia mentioned is key - make sure you measure the distance from your current home to both your old and new work locations to confirm you qualify. One thing I wish I had known earlier: if your company is paying for any relocation expenses, make sure you understand how that affects your taxes. Some employer-paid moving expenses might be taxable income to you now (the rules changed in recent years), but that's separate from the house sale capital gains issue. Also, start gathering your documentation now even if the transfer isn't finalized yet. I had to scramble to find emails and official transfer notices when it came time to file. Having everything organized early made the whole process much smoother with my tax preparer. Given your 8 months of ownership and potential $45k gain, you should be in good shape tax-wise if the work relocation qualifies for the partial exclusion!