38 of 40. If a taxpayer repossesses a former principal residence and resells the property within one year, recomputed gain: May be excluded under the sale of home rules if the seller was eligible in the year of the original sale. May be excluded under the sale of home rules if the seller was eligible in the year of the second sale. Is fully taxable as ordinary income. O Is deductible as a nonbusiness bad debt. Mark for follow up << Back Save / Return Later Summary Next >>