Question

Andy, who is single, sold his house on Put-in-Bay, which he bought in 2016, and lived there until it sold. Andy paid $50,000 for the house, which he sold for $500,000. What is the taxable gain on the sale of his residence?

Select one:

a. $200,000

b. $0

c. $500,000

d. $450,000

Answer 1

Andy, who is single, sold his house on Put-in-Bay, which he bought in 2016, and lived there until it sold. Andy paid $50,000 for the house, which he sold for $500,000. What is the taxable gain on the sale of his residence?

Select one:

$500,000 - $50,000 - ($250,000 exempt)

a. $200,000

a) When you sell your house, the capital gains from the sale are generally taxed a hefty amount: up to 15% which can take a bite out of your profits.

But if you do things right, the IRS will actually give you a nice tax break: you can completely exclude up to $250,000 in gain from taxes if you’re single; $500,000 if you’re married filing joint.

b) Who qualifies for the exclusion?

People who own and use a home as a primary residence for at least 2 of the 5 years before selling their home.

c) What type of home qualifies?

Basically, any home that is your primary residence. Doesn’t matter if it’s a single family home, condo, townhouse, whatever.

What determines whether a home is your primary residence is whether you are physically living in the home.