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Author: george4jags One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121572  
Subject: Reduced CGT deduction Date: 2/22/2006 5:21 PM
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Hi - I moved to the US in 96 for a new job but I kept ownership of my old house in the UK. I finally sold this in 2005. Do I qualify for the reduced CGT deduction outlined here

http://www.irs.gov/publications/p523/ar02.html#d0e3166

Based on the safe harbor distance test

Any advice gratefully received.

Thanks
George
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Author: WPatch Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 84254 of 121572
Subject: Re: Reduced CGT deduction Date: 2/22/2006 6:56 PM
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Hi - I moved to the US in 96 for a new job but I kept ownership of my old house in the UK. I finally sold this in 2005. Do I qualify for the reduced CGT deduction outlined here

http://www.irs.gov/publications/p523/ar02.html#d0e3166

Based on the safe harbor distance test.


No, the reduced capital gains exclusion is only applicable if you have been owner and occupier of a principal residence within the last 5 years. Incidently, this may be extended by several years if one is serving in the US armed forces after a move.

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Author: george4jags One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 84259 of 121572
Subject: Re: Reduced CGT deduction Date: 2/22/2006 7:27 PM
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No, the reduced capital gains exclusion is only applicable if you have been owner and occupier of a principal residence within the last 5 years. Incidently, this may be extended by several years if one is serving in the US armed forces after a move.



Despite this from the IRS

Reduced Maximum Exclusion
You can claim an exclusion, but the maximum amount of gain you can exclude will be reduced if either of the following is true.

You did not meet the ownership and use tests, but the reason you sold the home was:

A change in place of employment,


Health, or

Unforeseen circumstances (as defined later).






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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 84262 of 121572
Subject: Re: Reduced CGT deduction Date: 2/22/2006 7:44 PM
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You can claim an exclusion, but the maximum amount of gain you can exclude will be reduced if either of the following is true.

You did not meet the ownership and use tests, but the reason you sold the home was:

A change in place of employment,


What about that pesky 9 year gap between the time you moved due to a change in place of employment and the sale of the house?

The problem is that it is now very hard to argue that the sale of the house is now connected to your change in jobs.

Of course, we could ignore this and just go on to the formula to calculate a reduced maximum exclusion. So looking back at the last 5 years before the sale, how many days did you use the house as your principal residence? Based on your prior posts, I'm guessing that would be none. You were living in the US, not in the UK. So even using the proration formula we still get the result that there is no exclusion.

--Peter

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Author: george4jags One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 84266 of 121572
Subject: Re: Reduced CGT deduction Date: 2/22/2006 9:41 PM
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Hi Peter

so its smaller after all ......



Thanks

George

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 84342 of 121572
Subject: Re: Reduced CGT deduction Date: 2/24/2006 3:15 AM
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Despite this from the IRS

Reduced Maximum Exclusion
You can claim an exclusion, but the maximum amount of gain you can exclude will be reduced if either of the following is true.

You did not meet the ownership and use tests, but the reason you sold the home was:

A change in place of employment,


You misread it. The reduced exclusion applies if you can't come up with the 2 year part. Except for the military exception, nothing extends the 5 year part. Since you moved in 1996, the 5 years are long gone, and no matter how you twist it, there's no exclusion.

Phil

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