Program is not giving me "Gain on the sale of home exclusion" (Active duty military suspending 5 year rule)

Forum|Forum|2 years ago
March 6, 2024
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We bought our home in July 2011 and had to move due to military orders in June 2014 (therefore we lived in the home as our primary residence for 3 years). I continued on active duty stationed more than 50 miles from the home until I retired in October 2022 (therefore suspending the 5 year test period of ownership and residence for 8 years and 4 months). We sold the home in July 2023 (9 months under the regular rules for 5 year test period of ownership and residence).

The home was used as a rental from June 2014 until June 2023.

Should we have a "Gain on the Sale of Home Exclusion"? If so, how do I ensure that the program reflects that correctly?

DMarkM1

You will qualify for an exclusion on the gain on the sale of your principle residence (up to 500,000 for joint filers) under the suspension for military service exception. However, the property was a rental for 2014-2023 and the depreciation you could have taken over those years is not part of that exclusion.

Using the "Sale of Home" topic in the "Less Common Income" dropdown
Enter the purchase and sale information
Answer the questions about ownership and residence
You will answer No, you did not meet the residence criteria initially.
Later you will be asked about the reason for the sale
Select "Other"
On the next page select the "Military service" item
You will then be asked if you meet the residence requirement with the suspension
Answer "Yes"
Now the exclusion will be activated
Next, you will be asked about any unqualified use
Answer No
Then you will be asked about using the property for business or rental
Answer Yes
You will be asked to enter the depreciation you could have taken during the rental period
It does not matter whether you actually took the depreciation; you must claim it
Continue
Your exclusion minus the depreciation recapture will be shown