Currently i am working through the tax issues (qualified vs unqualified use) with having sold my home in VA and finding it a lot more difficult to get a clear answer than i thought. Hoping someone here has dealt with this situation before and could offer any clarification on one tax rule that is tripping me up for lack of clear explanation.

Situation:

1) Bought house Primary residence on 10/1/2008 in VA and moved in right away.

2) Took new job assignment (assumed to be temporary for 2 years) within company 6/1/2010 requiring move to Hawaii. Assignment was extended for an additional 8 months.

3) Rented house till 2/1/2013 when i returned to old job & moved back into house.

4) Sold house 4/2016

So my understanding is that i had 91 mo of ownership and 32 months of non primary residence usage. However there are several exemptions under to the non qualified usage time listed:

https://www.irs.gov/publications/p17/ch15.html

https://www.irs.gov/pub/irs-pdf/p523.pdf

That indicate that Any other period of temporary absence (not to exceed an aggregate period of 2 years) due to change of employment, health conditions, or such other unforeseen circumstances as may be specified by the IRS does not count as non qualified use. I read this before putting my house up for rent and thought it was clear that i could exclude up to 2 years of the time i had it as a rental due to my job move. But not i am actually doing my taxes and it seems more confusing (especially the second IRS publication which seems to imply that if you go over 2 years then you get no exemption). I have found specific examples covering other exemptions, but not the specific one i am dealing with. The tax form you fill out for this property sale is also not very clear and only has you enter "number of days not used as primary residence" vs "number of non qualified days".

examples i have found : http://scholarworks.sjsu.edu/cgi/viewcontent.cgi?article=1029&context=contemp_tax

http://www.floresattorneys.com/popup-newsletter.php?PageID=294798

Bottom line is I am trying to figure out whether i 32/91 of the capital gains is taxable or if 8/91.

Has anyone dealt with this situation or anything similar before? Thanks!

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