Mike-I’m not sure your wording equates to the explanation of the escrow account and calculating the amount needed at closing. There is no capitalization of an escrow account. The lender actually uses a very simple formula to determine that there won’t be a shortage when it comes time to pay those bills. In many areas, the taxes paid in 2019 are actually 2018 taxes. In your case, it sounds like the taxes paid in 2019 are 2019 taxes. So by paying in July 2019, you are paying the “current year’s” taxes. If you were paying the 2020 taxes in 2019, you would then be paying a year ahead. How much you bring to closing has more to do with how soon the taxes need paid. You bring more to closing if the taxes are due in 2 months versus if they were due in 11 months.

Because people don't object to tax increases. For any government entity... You can always hire more policemen. You can always give every policemen a newer SUV. Provide a high end car and a driver to every principle and superintendent You can always hire more vice principals. You can always give 3 , 4, 5 percent raises or better retirement packages to every employee. You can spend infinite amounts of money on schools, roads, bridges, improving infrastructure, cleaning lakes, ponds, etc. You can always build a new school and order new architectural design with 20 million payment to architectural firm . You can always spend more money decorating and equipping every classroom. Build new stadium, cricket field, public pools. Hire more administrators to make sure every process is documented and better computers / software. As a taxpayer you should always vote NO to every tax increase or spending venues. Because the government has the ability to spend infinite amounts of taxpayer money.

I understand the cause maybe a bit of a stretch, however from my research on what an unforeseen event is, it's defined fairly broadly. My first inclination was that you were crazy, but as I start thinking about it, it becomes an interesting question. If I am understanding you correctly, you want to claim the Section 121 exclusion on the rental property and then claim the rest of the exclusion using 121(c) on the house that you are actually living in. That is an interesting idea... Going just by the tax code as written it seems it would work, but I will bet dimes to dollars that the courts have already set some precedent on it. Assuming this qualifies as an unforeseen circumstance... I suspect your normal exclusion would have to go on the rental property and your 121(c) would have to go on your residence. Your rental property would have to be sold significantly earlier in the year than your home to even bother trying it, as the exclusion percentage would be calculated as the time between those two sales divided by two years. I am way out of my depth here, and suspect many are, so please don't take this as anything near advice. ______ ETA: As I understand it... The section 121(c) exception removes the 2 years of residence and the 2 years between sales requirements in certain scenarios when the selling the house is substantially an involuntary conversion (which includes certain job, financial and safety situations). Both the 2 years residency and the 2 years between exemptions are clearly meant to prevent people flipping houses and the 121(c) exception is meant to ease those restrictions for people who are not flipping houses and who didn't foresee their present circumstance when buying the house. As I went to bed last night, I was fully convinced that you could pull this off if framed correctly, but then theory of tax and practice of tax are largely two different things. Assuming that there was some time between the two sales, it might be worth a call to a tax attorney.

Is adding an ADU to your home worth it? After the County increases property tax, additional rental insurance, additional utility fees.......(Oregon, Clackamas County)