How to report sale of rental house that used to be primary residence

[Greta]

Primary residence as of mid-2016. Client got married and moved to spouse's house in mid-2019. Rented her house mid-2019  till its sale expected end of 2022. Is there a way to squeeze out a portion of the 250K forgiveness for selling a house that was a primary residence for 1.5yrs.

[dkh]

Sell date 2022 - last used as residence 2019...so falls within 5 year period.  How did you calculate the 1.5years of residence ?  If she lived there mid-2016 to mid-2019, isn't that 3 years ? 

[Greta]

My rental schedule shows rental began June 2019, and house hasn't sold yet, so I figured that's over 3 of most recent 5 years. I am looking to see if she is eligible for an extenuating circumstance to give her partial forgiveness of gain; and if she somehow qualifies, how to combine Sch D and 4797

[dkh]

Ok, I see why less than 2 years.   Does getting married qualify as an extenuating circumstance?  

The Home Sale Worksheet will work out the calculation for the rental portion vs residence exemption portion (if she qualifies). 

[TaxGuyBill · Accepted solution]

Unless she moved out-of-town and meets the 50 mile employment Safe Harbor, I don't see it qualifying for an exclusion.

https://www.irs.gov/publications/p523#en_US_2021_publink100073096