Don’t flip out over home sale exclusion

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in Small Business Tax

Q. We bought a home and then “flipped it” for a profit. Do we qualify for partial home sale gain exclusion if we lived there? G.M., Jupiter, Fla.

A. No. The home sale gain exclusion is available to taxpayers who own and use a home as principal residence for at least two out of the five years preceding the sale. A partial exclusion is allowed if the two-year rule isn’t met due to a job-related move, health reasons or certain other unforeseen circumstances. But the regulations don’t treat flipping a home for a profit as an “unforeseen circumstance” nor is the IRS likely to approve.

Tip: The maximum home sale gain exclusion is $250,000 for single filers and $500,000 for joint filers.

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