Hi!
Does anyone out there have experience or know about special rules for military personnel when selling a home?
The IRS publication I found on selling a home (#523) says:
Members of the uniformed services or Foreign Service. You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve on “qualified official extended duty” as a member of the uniformed services or Foreign Service of the United States. This means that you may be able to meet the 2-year use test even if, because of your service, you did not actually live in your home for at least the required 2 years during the 5-year period ending on the date of sale.
If this helps you qualify to exclude gain, you can choose to have the 5-year test period suspended by filing a return for the year of sale that does not include the gain.
Example.
David bought and moved into a home in 1998. He lived in it as his main home for 2½ years. For the next 6 years, he did not live in it because he was on qualified official extended duty with the Army. He then sold the home at a gain in 2006. To meet the use test, David chooses to suspend the 5-year test period for the 6 years he was on qualified official extended duty. This means he can disregard those 6 years. Therefore, David's 5-year test period consists of the 5 years before he went on qualified official extended duty. He meets the ownership and use tests because he owned and lived in the home for 2½ years during this test period.
Period of suspension. The period of suspension cannot last more than 10 years. Together, the 10-year suspension period and the 5-year test period can be as long as, but no more than, 15 years. You cannot suspend the 5-year period for more than one property at a time. You can revoke your choice to suspend the 5-year period at any time.
...
Qualified official extended duty. You are on qualified official extended duty if you serve on extended duty either:
*At a duty station at least 50 miles from your main home, or
*While you live in Government quarters under Government orders.
You are on extended duty when you are called or ordered to active duty for a period of more than 90 days or for an indefinite period.
So, one question is, what constitutes your "main home?"
And does qualified offical extended duty include a permanent change of station?
Anyone know about this?
Does anyone out there have experience or know about special rules for military personnel when selling a home?
The IRS publication I found on selling a home (#523) says:
Members of the uniformed services or Foreign Service. You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve on “qualified official extended duty” as a member of the uniformed services or Foreign Service of the United States. This means that you may be able to meet the 2-year use test even if, because of your service, you did not actually live in your home for at least the required 2 years during the 5-year period ending on the date of sale.
If this helps you qualify to exclude gain, you can choose to have the 5-year test period suspended by filing a return for the year of sale that does not include the gain.
Example.
David bought and moved into a home in 1998. He lived in it as his main home for 2½ years. For the next 6 years, he did not live in it because he was on qualified official extended duty with the Army. He then sold the home at a gain in 2006. To meet the use test, David chooses to suspend the 5-year test period for the 6 years he was on qualified official extended duty. This means he can disregard those 6 years. Therefore, David's 5-year test period consists of the 5 years before he went on qualified official extended duty. He meets the ownership and use tests because he owned and lived in the home for 2½ years during this test period.
Period of suspension. The period of suspension cannot last more than 10 years. Together, the 10-year suspension period and the 5-year test period can be as long as, but no more than, 15 years. You cannot suspend the 5-year period for more than one property at a time. You can revoke your choice to suspend the 5-year period at any time.
...
Qualified official extended duty. You are on qualified official extended duty if you serve on extended duty either:
*At a duty station at least 50 miles from your main home, or
*While you live in Government quarters under Government orders.
You are on extended duty when you are called or ordered to active duty for a period of more than 90 days or for an indefinite period.
So, one question is, what constitutes your "main home?"
And does qualified offical extended duty include a permanent change of station?
Anyone know about this?