We have owned our house for less than two years and are selling our home. My wife was pregnant with twins when we bought the house, and the twins were born after we had owned and lived in the house for 3 months.
Can we claim this as an "unforeseen circumstance" and receive a partial exemption (even though we knew she was pregnant with twins when we bought the house)?
It would seem based on the explanation from the IRS website that the birth of multiples is a safe harbor event no matter when it occurred during the ownership and use of the property.
From the IRS website:
Additionally, the final regulations clarify that a sale or exchange by reason of unforeseen circumstances (other than a sale or exchange within a safe harbor) does not qualify for the reduced maximum exclusion if the primary reason for the sale or exchange is a preference for a different residence or an improvement in financial circumstances.
Under the temporary regulations, a taxpayer’s primary reason for the sale or exchange is deemed to be unforeseen circumstances if one of the following safe harbor events occurs during the taxpayer’s ownership and use of the property: (1) involuntary conversion of the residence, (2) a natural or man-made disaster or act of war or terrorism resulting in a casualty to the residence, and (3) in the case of a qualified individual, (a) death, (b) the cessation of employment as a result of which the individual is eligible for unemployment compensation, (c) a change in employment or self-employment status that results in the taxpayer’s inability to pay housing costs and reasonable basic living expenses for the taxpayer’s household, (d) divorce or legal separation under a decree of divorce or separate maintenance, (e) multiple births resulting from the same pregnancy, or (f) an event determined by the Commissioner to be an unforeseen circumstance.
Can we claim this as an "unforeseen circumstance" and receive a partial exemption (even though we knew she was pregnant with twins when we bought the house)?
It would seem based on the explanation from the IRS website that the birth of multiples is a safe harbor event no matter when it occurred during the ownership and use of the property.
From the IRS website:
Additionally, the final regulations clarify that a sale or exchange by reason of unforeseen circumstances (other than a sale or exchange within a safe harbor) does not qualify for the reduced maximum exclusion if the primary reason for the sale or exchange is a preference for a different residence or an improvement in financial circumstances.
Under the temporary regulations, a taxpayer’s primary reason for the sale or exchange is deemed to be unforeseen circumstances if one of the following safe harbor events occurs during the taxpayer’s ownership and use of the property: (1) involuntary conversion of the residence, (2) a natural or man-made disaster or act of war or terrorism resulting in a casualty to the residence, and (3) in the case of a qualified individual, (a) death, (b) the cessation of employment as a result of which the individual is eligible for unemployment compensation, (c) a change in employment or self-employment status that results in the taxpayer’s inability to pay housing costs and reasonable basic living expenses for the taxpayer’s household, (d) divorce or legal separation under a decree of divorce or separate maintenance, (e) multiple births resulting from the same pregnancy, or (f) an event determined by the Commissioner to be an unforeseen circumstance.
Federal Taxes: Selling a House - Capital Gains Exemption for Unforeseen Circumstances
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