Is there a way for a partial exclusion in this situation:
I left the US in 2016 to work from Istanbul, and still no end in sight as to how long I will be here. I have to sell the property (the only property I own in the US) which was always on rental since 2005 (while I myself was on rentals too). So this place was never a primary residence but on the other hand, it was not an investment property either because I did not own another home.
There are other blurry lines in my mind. And I'm not sure if I have any rights to lower the humongous capital gain tax that is waiting for me in case of a sale. The amount is deterrent I cannot make a move.
My plan is to sell it and use the proceeds in buying a home in Istanbul to use it as my primary residence. But there is no exchange between California and Istanbul/Turkey neither.
We bought it in 2005 at 300K. Now it is worth 900K. Capital gain is 600K. I have 450K equity in it. After the sale, I may end up 200K capital gain tax, if not more. And this is not purchased for investment purposes either. It was a controlled price unit that came with a 15-year no-sale restriction by the LA county. We qualified for it. And now the 15 year period is up.
I'm looking for ways to lower this tax due to my special circumstances but cannot figure it out.
Thanks for your help.