Question
Hi - quick question. We filed for bk in Sep '09 and were discharged in Feb '10. We owned two homes, our primary residence (which we moved into in Aug 2006) and a rental (which we moved out of in Aug 2006), both of which were included in the bk (ch 7). Due to some poor money management we owed $360k on the rental at the time of bk (paid $160k) and will be assessed capital gains. It is our understanding that if you lived in the home 2 out of the previous 5 years then you are eligible for capital gains exclusion of $500k.
My question is on the timing. Is the capital gains assessed in 2009 (when the bk estate was established) or 2010 (when the case was discharged) or is it when the home is actually foreclosed upon (we've not received an NOD at this point)? If it's 2009 then we should be eligible for the exclusion, if it's not then we're screwed.
Any help is greatly appreciated!
H4TB
My question is on the timing. Is the capital gains assessed in 2009 (when the bk estate was established) or 2010 (when the case was discharged) or is it when the home is actually foreclosed upon (we've not received an NOD at this point)? If it's 2009 then we should be eligible for the exclusion, if it's not then we're screwed.
Any help is greatly appreciated!
H4TB