Sale of home because of marriage….need help!?

Question

I’m trying to figure out what to do if I sold my home because I got married. I bought my home in June of 2004 and sold it in February of 2006 because I was going to get married and moved in with my spouse. We got married later in 2006. I did not own the home for the full two years to meet the tests to exclude the gain. I guess my question is, if I didn’t know I was going to get married when I bought my house, is that an unforeseen circumstance? I can’t find anything about this on the IRS website. Any information would be helpful.

Answer 1

The first thought that comes to mind is that you may have changed "jobs" which required the move. If you can make that case you get a portion of the exemption. But it is an interesting problem. One that your Realtor should have explained. Perhaps they will help you pay the tax.

Answer 2

Darn, you have a taxable gain the same year you got married and are perhaps in a higher tax bracket.

Marriage is not a qualifying event to exclude you from the tax on the gain. Read IRS Pub 523 to see if there is another reason you can use.

Did you change jobs some distance away? That would be a reason. Did you lose your job?

If you can't find any reason in Pub 523, figure your basis and sale price less commissions. Go to a professional tax preparer to get that gain down as low as possible. Report the gain on Schedule D.

Answer 3

No, getting married isn't going to get you a sprout from the IRS on the 2 year requirement. You should have waited the extra 4 months before selling.

However, since you owned it for over 1 year, the gain will be taxed at the lower long-term capital gains rate, normally 15%.

Answer 4

the 2 year test is strictly mechanical, and no exceptions apply (at least to the living).

Answer 5

The two year requirement is carved in stone, as far as I know.