I've lived in my residence for the last 4 years, but I've only owned it for 1.5 years (rented previously, and then I purchased from the landlord's estate after he passed).
Now the county is purchasing my house through a flood plain mitigation program. They will demolish the house after they buy it. The program is voluntary (but it makes no sense to not participate, because the flood problem makes the house practically un-sellable to any regular buyers.
I can push back the closing date to within 2 months of the 2-year ownership requirement for the capital gains exemption, but the flood mitigation program says it cannot grant any further extensions. They're being very firm with this.
Is there any work around to this? I'm happy to wait those extra 2 months for the sale proceeds if it will save me the tax bill, which would be significant. Any sort of trusts or escrow or anything else (forgive my ignorance!) that could somehow give me a date of sale that's 2 months after the closing?
I know I'm grabbing at straws, but I have the residency requirement covered already, and I'm so close to the ownership requirement.
Posted by doubleu7777
1 Comment
Unfortunately it doesn’t seem like you would meet the ownership test:
“At least 24 months out of the last 5 years leading up to the date of sale”
https://www.irs.gov/publications/p523
An attorney may be able to help with the sale/closing date negotiation
It’s *possible* your situation meets the exception for a partial gain exclusion (unforeseeable events), but that would take some research/experience with this particular program. Someone else here or a preparer in that or a similar area may have more experience if your circumstances apply/qualify