Warm Regards,
Ginger Tolentinas
Exeter Hotels

My husband & I worked hard (over 30 years) for our home that we lived in for 13 years. Due to a layoff, we had to relocate, but kept our family home so that we could move back in and retire in it, then sell it and take the capital gains to live on in our old age. Now, if we don't move back right away, it will be considered NON-QUALIFIED and every day we delay, we lose future gains. We are forced to stay where the jobs are until we can collect Social Security (Ha Ha!) and what is left of our IRA after the financial crash. Now, they took the our last real hope away from us.

I still am unclear about the formula. Maybe someone can figure it out for us? Bought the home in 1986, lived in it until 2000, rented until present. Plan to move in again in 16 years. (If we have to, we will split up our family so that at least one of us can claim it as our primary residence)

Please help us!

So if you bought in 1990 100,000 and sold in 2020 for 200k and lived as primary from 2018 to 2010 it would be 3,285(365 *9)/10,950 (365*30)=.30 so you would have to pay capital gains on 30k.

So lets say they sold the house on January 31 2009 and bought the house on January 1 2004 (all other variable remain the same). The equation would be 1,825 (365 *5)/1856(1825+31 days in 2009 not as primary)=.95*100,000=98,329. Which means you have to pay capital gains $1,671.

So it's not a look back it just takes into fact the amount of nonqualified use after January 1 2009. It is tax law and reading this crap doesn't make much sense but that is what I got out of it.

Congress closed another loop hole unfortunatly this hurts the middle class because they were the ones taking the risk and trying to build wealth through the old program.

According to Exeter (http://www.exeterco.com/article_changes_to_sect…

“Summary of Changes

Property Held For Rental or Investment First

Property held for investment purposes and then subsequently converted into a primary residence will be impacted the most under these legislative changes to Section 121.

The amount of time that the real property was held as investment property (non-qualified use) will no longer qualify for tax free exclusion under Section 121. Only the actual time that the real property was held and used as a primary residence (qualified use) will qualify for the tax free exclusion.

This will significantly affect those homeowners who had planned to move into investment property and convert its usage to their primary residence in order to take advantage of the 121 exclusion. The longer the real property was held for investment the greater the impact will be on the amount of capital gain that can be excluded from taxable income (i.e. the more capital gain that must be included in taxable income).

Property Held As Primary Residence First

The modifications made to Section 121 do not affect homeowners that move out of their primary residence and convert it to non-qualified use. The homeowner can still take the full amount of the 121 exclusion upon the sale of the property as long as they still qualify for the 121 exclusion.

In other words, a primary residence that is subsequently converted into investment property will still qualify for the tax free exclusion under Section 121 provided the property is sold no later than three (3) years after its conversion to investment property. The property will no longer qualify for the 121 exclusion once it has been held by the homeowner as investment property beyond the three (3) year window.”