Washington (August 22, 2002) -- Taxpayers affected by the September 11th terrorist attacks who sold a home before meeting the usual two-year ownership and use requirements will be able to exclude some or all of that gain under new rules just announced by the Treasury Department and the Internal Revenue Service.The tax law requires a person to own and use a home as a principal residence for two of the five years before the sale in order to exclude any gain, and allows an exclusion only once every two years. An exception applies if the sale is for reasons of health, change in employment, or, to the extent provided in IRS regulations, "unforeseen circumstances."

Treasury and IRS expect to issue these regulations in the near future. The regulations will consider the death of the taxpayer’s spouse, man-made disasters, and acts of war as unforeseen circumstances, and will give the IRS commissioner the discretion to determine other circumstances as unforeseen.

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