Publication 523 - Selling Your Home - 2003 (Page 15 of 31) in pdf

Worksheet 3. Reduced Maximum Exclusion

Caution: Complete this worksheet only if you qualify for a reduced maximum exclusion. (See

(A)

(B)

Reduced Maximum Exclusion.) Complete column (B) only if you are married filing a joint return.

You

Your Spouse

Maximum amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.

$250,000.00

2a.

Enter the number of days (or months) that you used the property as a main home

during the 5-year period* ending on the date of sale. (If married filing jointly, fill in

columns (A) and (B)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2a.

Enter the number of days (or months) that you owned the property during the 5-year

period* ending on the date of sale. If you used days on line 2a, you must also use

days on this line and on lines 3 and 5. If you used months on line 2a, you must also

use months on this line and on lines 3 and 5. (If married filing jointly and one spouse

owned the property longer than the other spouse, both spouses are treated as owning

the property for the longer period) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Enter the smaller of line 2a or 2b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Have you (or your spouse if filing jointly) excluded gain from the sale of another home

during the 2-year period ending on the date of this sale?

NO. Skip line 3 and enter the number of days (or months) from line 2c on line 4.

YES. Enter the number of days (or months) between the date of the most recent sale

of another home on which you excluded gain and the date of sale of this home . . . . . 3.

Enter the smaller of line 2c or 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.

Divide the amount on line 4 by 730 days (or 24 months). Enter the result as a decimal

(rounded to at least 3 places). But do not enter an amount greater than 1.000 . . . . . . 5.

Multiply the amount on line 1 by the decimal amount on line 5 . . . . . . . . . . . . . . . . . 6.

Add the amounts in columns (A) and (B) of line 6. This is your reduced maximum

exclusion. Enter it here and on Worksheet 2, line 8 . . . . . . . . . . . . . . . . . . . . . . . . 7.

*If you were a member of the uniformed services or Foreign Service during the time you owned the home, see Members of the uniformed

services or Foreign Service, to determine your 5-year period.

•

Mother-in-law, father-in-law, brother-in-law,

Specific event safe harbors. Unforeseen circumstances

sister-in-law, son-in-law, or daughter-in-law.

are considered to be the primary reason you sold your

home if any of the following events occurred while you

•

Uncle, aunt, nephew, or niece.

owned and used the property as your main home.

•

The sale of your home is not because of health if the

1) An involuntary conversion of your home.

sale merely benefits a qualified individual’s general

health or well-being.

2) Natural or man-made disasters or acts of war or

terrorism resulting in a casualty to your home,

whether or not your loss is deductible.

Example. In 2002, Chase and Lauren, husband and

wife, bought a house that they used as their main home.

3) In the case of qualified individuals (listed earlier

Lauren’s father has a chronic disease and is unable to care

under Change in Place of Employment):

for himself. In 2003, Chase and Lauren sell their home in

a) Death,

order to move into Lauren’s father’s house to provide care

for him. Because the primary reason for the sale of their

b) Unemployment (if the individual is eligible for un-

home was the health of a qualified individual, Chase and

employment compensation),

Lauren are entitled to a reduced maximum exclusion.

c) A change in employment or self-employment sta-

tus that results in your inability to pay reasonable

Doctor’s recommendation safe harbor. Health is con-

basic living expenses (listed under Reasonable

sidered to be the primary reason you sold your home if, for

basic living expenses next),

one or more of the reasons listed at the beginning of this

discussion, a doctor recommends a change of residence.

d) Divorce or legal separation, or

e) Multiple births resulting from the same pregnancy.

Unforeseen Circumstances

4) An event the Commissioner of IRS determined to be

The sale of your main home is because of an unforeseen

an unforeseen circumstance to the extent provided in

circumstance if your primary reason for the sale is the

published guidance and rulings. For example, the

occurrence of an event that you did not anticipate before

Commissioner determined the September 11, 2001,

buying and occupying your main home.

terrorist attacks to be an unforeseen circumstance.

Page 15

Publication 523 - Selling Your Home - 2003 Page 15

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