A homeowner may qualify for a partial exclusion if the sale of the home is due to a change in employment that meets specific criteria:

1. Distance Test: The new place of employment must be at least 50 miles farther from the home being sold than the previous workplace was.
   • For example, if your old job was 10 miles from your home, your new job must be at least 60 miles away from your home to qualify.
2. Change in Job Location: The job change must result in a move to a new location that requires a change in residence. This can include a new job with the same employer, a new employer, or starting a new business in a different location.

Calculating the Partial Exclusion

If you qualify for a partial exclusion, the amount of the exclusion is prorated based on the length of time you lived in the home relative to the two-year requirement. Here’s how it works:

Formula for Partial Exclusion:

Maximum Exclusion×(Number of Months of Ownership/Use24)\text{Maximum Exclusion} \times \left( \frac{\text{Number of Months of Ownership/Use}}{24} \right)Maximum Exclusion×(24Number of Months of Ownership/Use​)

Example Calculation:

Suppose you are a single filer and lived in the home for 12 months before selling it due to a job change. The maximum exclusion for a single filer is $250,000.
Partial Exclusion=250,000×(1224)=250,000×0.5=125,000\text{Partial Exclusion} = 250,000 \times \left( \frac{12}{24} \right) = 250,000 \times 0.5 = 125,000Partial Exclusion=250,000×(2412​)=250,000×0.5=125,000
In this case, you could exclude up to $125,000 of gain from your income.

Other Qualifying Reasons for Partial Exclusion

Besides a job change, other circumstances may also qualify for a partial exclusion:

Health Reasons:

If the sale is due to a doctor-recommended move to treat or alleviate a disease, illness, or injury.

Unforeseen Circumstances:

Such as divorce, death, multiple births from the same pregnancy, or natural disasters.

Documentation and Proof

To claim a partial exclusion, you do not need to submit specific forms to the IRS, but you should keep records that clearly document the job change or other qualifying events. These could include:

• A letter from your employer stating the new job location.
• Employment contracts or job offer letters.
• Medical records (for health-related moves).
• Other evidence showing the reason for the sale.