What is the Section 121 exclusion amount for a single individual who sells a primary residence after 18 months due to unemployment?

The Section 121 exclusion allows eligible homeowners to exclude a certain amount of capital gains from the sale of their primary residence. For a single individual, the exclusion amount is $250,000, provided that they have owned and used the home as their primary residence for at least two of the last five years before the sale.

However, if a homeowner sells their primary residence before meeting the two-year ownership and use requirement due to unforeseen circumstances, such as unemployment, they may still qualify for a partial exclusion. In the case presented, the individual sold their home after 18 months of ownership. Because they were compelled to sell due to unemployment, they may be eligible for a partial exclusion based on the time they did own the home.

The correct amount of the exclusion in this scenario is based on the time they owned the home, which can be calculated as a fraction of the standard exclusion. Since they owned the home for 18 months, they can qualify for a pro-rata portion of the $250,000 exclusion amount. This may result in an exclusion that would yield a maximum benefit of up to $125,000, rather than $187,500, which appears to have been chosen erroneously.

Ultimately, the realization is that the full exclusion amount