No problem, as you will be eligible for the reduced
exclusion under the facts and circumstances test. Treasury
Regulation 1=2E121-3,(e)(4),Example 6 could not be more on
point.

"In 2003 D and her fianc=E9 E buy a house and live in it as
their principal residence. In 2004 D and E cancel their
wedding plans and E moves out of the house. Because D cannot
afford to make the monthly mortgage payments alone, D and E
sell the house in 2004. The safe harbors of paragraph (e)(2)
of this section do not apply. However, under the facts and
circumstances, the primary reason for the sale, the broken
engagement, is an unforeseen circumstance because D and E
could not reasonably have anticipated the broken engagement
at the time they purchased and occupied the house.
Consequently, the sale is by reason of unforeseen
circumstances and D and E are each entitled to claim a
reduced maximum exclusion under section 121(c)(2)."

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- quote -

You fit into example 6 in Reg. 1.121-3(e)(4):

In 2003 D and her fiancé E buy a house and live in it as
their principal residence. In 2004 D and E cancel their
wedding plans and E moves out of the house. Because D cannot
afford to make the monthly mortgage payments alone, D and E
sell the house in 2004. The safe harbors of paragraph (e)(2)
of this section do not apply. However, under the facts and
circumstances, the primary reason for the sale, the broken
engagement, is an unforeseen circumstance because D and E
could not reasonably have anticipated the broken engagement
at the time they purchased and occupied the house.
Consequently, the sale is by reason of unforeseen
circumstances and D and E are each entitled to claim a
reduced maximum exclusion under section 121(c)(2).

-----

So you qualify for the reduced exclusion.

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- quote -

I can't find anything specifically on point for this, but my
best guess would be the IRS would take a big fat NO on that.
Is the mortgage in both names or just one? If both you may
be able to pursue her civilly for her part of the payment.
Of course, then she will force you to either buy her out or
sell the house to pay her half off or sell her half to a
stranger who would then be your roommate along with his 27
family members. Ain't love grand???

--
Kathy Morgan EA
H & R Block Master Tax Advisor
Proud Mom of Sgt RT Morgan
1/156 AR BN C Company
Louisiana Army National Guard
Baghdad, Iraq
<carlosandrade[at]cfl.rr.com> wrote:

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Perhaps!! There is a provision for marriage and separation
issues and another if you are unable to keep up with the
mortgage payments.

Having said that, you 'n' your ex will be reporting only
your share of the sale, assuming that partner agrees to
selling. Each of you would report based on your own
circumstances. Of course, if there is any break (since you
still live in the home) you would likely qualify for a
greater exclusion. In any event, by the time you sell, you
may have completed the 2 year requirement. If that happens,
you may qualify but your ex would not because she no longer
occupies the home and did not meet that requirement.

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<carlosandrade[at]cfl.rr.com> wrote:

- quote -

Maybe. Maybe not. An aggressive approach would be to
claim the prorated exemption under Sec 121 and assume it is
an unforeseen circumstance. The risk is it might be denied.

I assume house price have risen quickly so you will have a
gain even after costs of sale and improvements are taken
into account?

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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Change in financial circumstances does apply BUT was your
fiancee on title or on the loan? Was she obligated, in any
way, to make payments?

It might be wise to talk to the bank and try to avoid
foreclosure for the next 7 months.

Nan, EA in LA

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I bought a house with my fiancee about a year and 3 months
ago. A month ago she decided to break it off and moved out.
Now I can't afford the mortgage by myself and might have to
sell the house so I don't lose it. Will this situation fall
under the unforeseen circumstances clause?

Thanks in advanced for any advice,
Carlos

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