Publication 523 - Selling Your Home - 2003 Page 14
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31transfer was incident to divorce), you are considered to
6) During the time you owned the property, you used it
have owned it during any period of time when your spouse
as your home.
owned it.
Use of home after divorce. You are considered to have
Change in Place of Employment
used property as your main home during any period when:
The sale of your main home is because of a change in
1) You owned it, and
place of employment if your primary reason for the sale is a
change in the location of employment of a qualified individ-
2) Your spouse or former spouse is allowed to live in it
ual.
under a divorce or separation instrument and uses it
as his or her main home.
Qualified individual. For purposes of the reduced maxi-
mum exclusion, a qualified individual is any of the follow-
ing.
Reduced Maximum Exclusion
•
You.
You can claim an exclusion, but the maximum amount of
•
Your spouse.
gain you can exclude will be reduced if either of the follow-
•
ing is true.
A co-owner of the home.
•
A person whose main home is the same as yours.
1) You did not meet the ownership and use tests, but
the primary reason you sold the home was:
Employment. For this purpose, employment includes the
a) A change in place of employment,
start of work with a new employer or continuation of work
with the same employer. It also includes the start or contin-
b) Health, or
uation of self-employment.
c) Unforeseen circumstances (as defined later).
Distance safe harbor. A change in place of employment
2) Your exclusion would have been disallowed because
is considered to be the primary reason you sold your home
of the rule described in More Than One Home Sold
if :
During 2-Year Period, later, except that the primary
1) The change occurred during the period you owned
reason you sold the home was:
and used the property as your main home, and
a) A change in place of employment,
2) The new place of employment is at least 50 miles
b) Health, or
farther from your home than the former place of
employment was.
c) Unforeseen circumstances (as defined later).
Use Worksheet 3 to figure your reduced maximum ex-
Example. Justin was unemployed and living in a
clusion.
townhouse in Florida that he had owned and used as his
main home since 2002. He got a job in North Carolina and
Primary reason. If certain sets of facts and circum-
sold his townhouse in 2003. Because the distance be-
stances (safe harbors) apply to you, the primary reason
tween Justin’s new place of employment and the home he
you sold the home is considered to be a change in place of
sold is at least 50 miles, the sale satisfies the conditions of
employment, health, or unforeseen circumstances. If your
the distance safe harbor. Justin’s sale of his home is
home sale does not qualify under one of these safe
because of a change in place of employment and he is
harbors, factors that may be relevant in determining your
entitled to a reduced maximum exclusion of gain from the
primary reason for sale include whether:
sale.
1) Your sale and the circumstances causing it were
Health
close in time,
2) The circumstances causing your sale occurred dur-
The sale of your main home is because of health if your
ing the time you owned and used the property as
primary reason for the sale is to obtain, provide, or facilitate
your main home,
the diagnosis, cure, mitigation, or treatment of disease,
illness, or injury of a qualified individual. For purposes of
3) The circumstances causing your sale were not rea-
this reason, a qualified individual includes, in addition to
sonably foreseeable when you began using the prop-
the individuals listed earlier, any of the following.
erty as your main home,
•
Parent, grandparent, stepmother, stepfather.
4) Your financial ability to maintain your home materi-
•
ally changed,
Child, grandchild, stepchild, adopted child.
•
5) The suitability of your property as a home materially
Brother, sister, stepbrother, stepsister, half brother,
changed, and
half sister.
Page 14
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