Does Home Sale Capital Gain Exclusion apply for home in a foreign country?

[Turtle43]

TP is a US Citizen who moved to China for work a few years ago.  His Main Home is in China.  He used to own a home in the US which had been sold 2017 or earlier.

Tax Planning Question: If he lived in the China Home for at least 2 out of 5 years, can he sell and benefit from Home Sale Capital Gain Exclusion with a Main Home that is outside of the US?

[Just-Lisa-Now-]

Did he use the exclusion on the home in the US that was sold in 2017?

[abctax55]

:+1:

[itonewbie]

I was thinking this wouldn't happen until at least 2 years after the sale of his US home.

[abctax55]

:clap:

[Turtle43]

This is a tax planning question on if he would be able to take a Cap Gain Exclusion based on current tax law if he were to sell his Primary Home in China in the future if he lived in it >2 years (24 months) out of at least 5 years that he owns the China home.  

I am aware that he could not take the Capital Gain Exclusion in 2018  if he just took the Cap Gain Exclusion on Primary Home in 2017 tax return. I am requesting his 2017 and 2016 tax returns since he is a new client to me. He files 1040 with Foreign Income Exclusion. Thank you for your input.

[Turtle43]

TP was not able to take advantage of the Cap Gain Exclusion because he moved to China for work more than 5 years before he sold his US Home.  I think the answer is YES,  in the future when he sells his Main Home in China and lived there 2 out of 5 years and did not take the same exclusion 2 years before the sale, he can qualify for the Cap Gain Exclusion even the home was in a foreign country. Thank you!

[itonewbie]

Thanks for the update, @Turtle43. Glad to be of help.

[itonewbie · Accepted solution]

Yes