Thomas Healy <tomhealycpa[at]earthlink.net> wrote:
- quote -

<snip
- quote -

Thanks, Tom. You confirmed what I thought. Talked to the
client again and it turns out she's just hoping to break
even on the sale, so it doesn't look like there's going to
be a big issue no matter when the place finally sells.

Catherine

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"Catherine White" <cgrantNoSpam[at]alum.mit.edu> wrote:

- quote -

What is there to do? You can only claim one exclusion every
two years. Either amend the prior year and pay tax or pay
tax on the next sale in 05.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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"Catherine White" <cgrantNoSpam[at]alum.mit.edu> wrote:

- quote -

Normally they can only use the exclusion once every two
years. Thus, as long as they sell house #2 after Sept. 2006
(two years after the sale of house #1) and before December
2006 (3 years after moving out of house #2) they can exclude
gain. A pretty narrow window!

"Going to college" isn't one of the safe harbors for
shortening the period. So, unless they got jobs in the
college town, I think they're out of luck for house #2 if
they sell it this year.

--
Tom Healy, CPA
Boulder, CO
Web: http://www.tomhealycpa.com

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I have a new client who will be posing me a tricky house
sale situation to deal with, and I was hoping for advice and
gotcha's to watch for. Here's the scoop:

House #1 in State #1: Purchased Sept 98; lived in until
Sept 01. Moved to State #2 at that point for personal
reasons, started renting out House #1. Purchased House #2
in State #2 at some point (I don't have that date yet).

Rented out House #1, reported Sch. E income, took
depreciation, etc. in 01 (for the last couple of months),
02, 03, 04 (for the first couple of months). Sold house in
Sept 04. _Just_ squeaked in under the wire for "primary
residence 2 of last 5 years" to exclude gain (except for
depreciation recapture); literally by days. Total excluded
gain was about $55K.

In Jan 04, moved to State #3 to go back to college. Still
has House #2 in State #2 (empty, listed for sale, hasn't
sold yet). Rents livning space in State #3. Lived in House
#2 from purchase (in 01?) through Dec 03. Could therefore
still claim primary residence for 2 of last 5 years. What do
I need to watch out for, and what should I warn my client to
watch out for in this? How should I handle this next year
-- assuming this second house sells in 05?

Any advice from all you folks would be appreciated.

Thanks!

Catherine

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